ECB policymaker Mario Centeno suggested that interest rates might need to be reduced below the neutral level of 1.5% to 2% to maintain the inflation target of 2%. He emphasized the importance of not allowing monetary policy to push inflation below the desired target amid global trade tensions and economic uncertainty.

Italian Prime Minister Giorgia Meloni is anticipating a credit rating upgrade from Moody’s, aiming to lift Italy out of its near-junk status. The potential upgrade reflects Italy’s efforts to implement fiscal reforms and stabilize its economy.

German Chancellor Friedrich Merz expressed a preference for the EU to scrap its supply chain audit law, citing concerns over competitiveness. However, his spokesperson clarified that Germany seeks to reform and streamline the law rather than abolish it, aiming to reduce bureaucracy while maintaining ethical standards.

Chancellor Friedrich Merz announced plans to allocate 1.5% of Germany’s GDP toward infrastructure projects with dual military and civilian uses, such as bridges and roads. This is in addition to the 3.5% GDP commitment for military procurement, aligning with NATO requirements.

Experts caution that Germany’s substantial new public spending, dubbed the ‘bazooka’ package, must be deployed effectively to ensure long-term economic growth. The package includes significant investments in defense and infrastructure, aiming to bolster the country’s economic resilience.

German Finance Minister Lars Klingbeil and US Treasury Secretary Scott Bessent held a bilateral meeting during the G7 finance ministers’ summit in Banff, Canada, discussing economic cooperation and trade issues.

European Central Bank (ECB) policymaker Mario Centeno suggested that the ECB might need to lower its key interest rate below the estimated neutral level of 1.5% to 2% to maintain inflation at the target of 2%. Speaking at a news briefing following the presentation of the Bank of Portugal’s financial stability report, Centeno emphasized the importance of not allowing monetary policy to push inflation below the desired target. He cited global trade tensions and an uncertain economic environment as reasons for adopting a cautious and predictable monetary policy strategy.

Italian Prime Minister Giorgia Meloni is aiming to improve Italy’s credit rating, which is currently near junk status. She is focusing on fiscal discipline and structural reforms to convince Moody’s Investors Service to upgrade the country’s rating. An upgrade would lower borrowing costs and signal confidence in Italy’s economic policies.

German Chancellor Friedrich Merz has called for the European Union to abandon its proposed supply chain audit law, citing concerns over its economic impact. The law, known as the Corporate Sustainability Due Diligence Directive (CSDDD), would require large companies in the EU to ensure their supply chains are free of forced labor and environmental harm, with obligations beginning in 2027. Merz argues that these regulations could hinder Europe’s competitiveness against the U.S. and China.

Germany plans to allocate 1.5% of its GDP toward infrastructure with dual military and civilian uses, according to Chancellor Friedrich Merz. This funding is in addition to the country’s commitment to spend 3.5% of its GDP on military procurement in line with NATO requirements. Speaking at a construction industry event, Merz highlighted that the additional funds would be directed toward infrastructure such as bridges and roads that can support military operations.

Germany’s new government must ensure massive new public spending is deployed carefully so that it boosts growth over the long term, experts said Wednesday. The government’s council of economic experts said the extra public spending, dubbed a fiscal “bazooka” by the media, could lead to up to five additional percentage points of GDP growth by 2029—or have no substantial effect at all. It depended on whether the funds were used for sorely needed structural improvements, or on day-to-day spending that boosts consumption but whose effects quickly fade, they said.

German Finance Minister Lars Klingbeil and U.S. Treasury Secretary Scott Bessent held a bilateral meeting during the G7 finance ministers’ summit in Canada. The discussion focused on strengthening transatlantic ties and resolving trade disputes between Germany and the United States. Both officials reaffirmed the G7’s commitment to supporting Ukraine, and Bessent extended an invitation to Klingbeil for a follow-up meeting in Washington.