European Central Bank policymakers may lower interest rates slightly below 2% due to growing risks from global trade tensions, according to Belgium’s central bank governor Pierre Wunsch.
In an interview with the Financial Times, Wunsch—once considered a policy hawk—said recent economic shocks, particularly after U.S. President Donald Trump’s tariff moves on April 2, have created “downside risks to inflation” and eurozone growth.
While he ruled out a large 0.5% rate cut, Wunsch said modest easing was justified. The ECB’s current deposit rate stands at 2.25%, and markets are now pricing in a 90% chance of a rate cut on June 5, with expectations it could bottom out at 1.75%.
Wunsch added that while the eurozone could face a short-term economic shock, a rebound may follow in 2026–2027.