• Eurozone inflation depends on EU retaliation to the US.
  • Geopolitics since the starts of the year is bad news for the economy.
  • There is downward pressure on inflation.
  • Need to watch for China goods rerouting to Europe.
  • ECB June projections may be a little bit worse.
  • June ECB cut is needed.
  • There is no central scenario for ECB rates.
  • It's unclear if a post-June cut will be in July or September.
  • We are more or less there on inflation.
  • Quite high chances we'll be undershooting on inflation.

Now that the US has made it clear that the 10% tariff rate is the floor, the ball is in EU's court. Will they take a more hawkish stance?

ECB's Simkus
ECB's Simkus
Source: Forex Live