The European Central Bank (ECB) may need to lower borrowing costs to “slightly below” 2 percent due to global trade wars impacting consumer prices, according to Belgium’s central bank governor Pierre Wunsch. He indicated that the ECB’s key deposit facility rate, currently at 2.25 percent after seven cuts since June, could be further reduced, with markets expecting a quarter-point cut in June and another later this year. Wunsch’s shift from a hawkish stance suggests a growing divergence within the ECB, particularly with Isabel Schnabel’s opposing view on inflation risks stemming from trade tensions.
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