Eurozone Inflation Eases, Paving Way for ECB Rate Cuts

Inflation in the eurozone dropped to 1.9% in May, prompting the ECB to consider rate cuts despite trade tensions with the US. Falling energy prices contributed to this decline, allowing the ECB to focus on the impact of US tariffs on European goods. Analysts predict further cuts.

Inflation in the eurozone fell to 1.9% in May from 2.2% in April, opening the door for possible rate cuts by the European Central Bank (ECB). This development comes amid escalating trade tensions caused by US President Donald Trump imposing tariffs on European goods.

Lower energy prices were instrumental in bringing inflation below the ECB's target for the first time since September. With inflation appearing manageable after its previous surge, the ECB can now concentrate on the potential economic slowdown driven by new US import taxes on EU products.

The ECB's upcoming decision under President Christine Lagarde is anticipated to include a rate cut. Analysts predict a reduction of a quarter percentage point and suggest additional cuts could occur in future meetings. Meanwhile, Trump's tariff policies continue to cast a shadow over the eurozone's economic growth projections, now revised downward by the EU.

(With inputs from agencies.)