Eurozone News
LAST UPDATE: June 16, 2025
ECB relaxed about euro strength, risk of too low inflation, de Guindos says
ECB Vice President de Guindos downplayed concerns that the euro’s recent strength (~$1.15–1.16) and low inflation (1.4 %) pose problems. He highlighted labor market tightness and wage growth supporting a rebound to the 2 % target.
Insight
The ECB appears poised to pause further rate cuts, signaling that its balance of risks allows tolerating current exchange‑rate and inflation conditions, with policy considered near its neutral stance.
ECB shouldn’t rush into further rate cuts, Bundesbank’s Nagel says
Bundesbank President Nagel cautioned against further cuts or signaling a pause, arguing for policy flexibility amid inflation hitting target and global uncertainties—e.g., Middle East tensions and trade wars.
Insight
Nagel’s intervention suggests friction within ECB: while policy may be near its end, caution prevails. Continued tightening in core countries like Germany underscores divergence in euro‑zone confidence.
Ireland signals budget caution on rising global trade risks
Irish ministers warned that growing global trade uncertainty—driven by tariff threats—necessitates tighter management of public finances ahead of the next budget.
Insight
Facing external shocks, Ireland appears to shift from aggressive fiscal expansion toward cautious planning to protect its reputation as a stable corporate tax hub.
Finland cuts GDP growth forecasts due to tariffs, trade policy uncertainty
Finland revised down its GDP forecast for 2025 to around 1.0 % (from 1.7 %), attributing lower growth to U.S.‑initiated tariffs and uncertainty in trade policy dampening corporate investment.
Insight
The forecast downgrade reflects Finland’s sensitivity to trade shocks; it underlines the need for fiscal support in non-essential areas to help buffer the economy without undermining essential services.
Croatian consumer prices rise 3.5% in May on the year
Reuters
Consumer prices rose 3.5% year–on–year in May. Biggest increases: restaurants & hotels (+9%), food & non-alcoholic beverages (+5.7%). Utilities, recreation, education also up, while transport and clothing fell.
Insight
Persistent broad-based inflation, especially in services and food, could strain household budgets and lead to policy pressure if sustained.
ECB has learned its lesson about ills of easy money, de Guindos says
ECB Vice President de Guindos acknowledged that past QE and negative rates had side effects—including asset bubbles—and said future use will be more cautious. A strategy review is expected this summer.
Insight
The ECB is shifting to a more balanced use of tools, mindful of financial stability risks. The upcoming strategy will shape its cautious approach to unconventional easing.
ECB relaxed about euro strength, risk of too low inflation, de Guindos says
De Guindos downplayed concerns over the euro’s appreciation (~$1.15) and low inflation (1.4 %), stating they aren’t problematic given labor market tightness and wage growth. He expects inflation to rebound to 2%.
Insight
The ECB appears comfortable with current currency levels and views inflation risks as manageable, marking a shift toward a data-dependent, flexible policy stance.
ECB Shouldn’t Rush Into Further Rate Cuts, Bundesbank’s Nagel Says
Bundesbank President Nagel cautioned against preemptive rate cuts or signalling a pause, emphasizing policy flexibility amid global risks and noting slower German growth.
Insight
Nagel’s caution emphasizes a hawkish undercurrent within the ECB, prioritizing readiness for inflation or external shocks over premature easing.
Ireland Signals Budget Caution on Rising Global Trade Risks
Bloomberg
Irish government officials warned that rising trade tensions—especially U.S. tariff threats—necessitate more cautious fiscal budgeting ahead of the next national budget.
Insight
Ireland is shifting from expansionary to prudent fiscal policy to safeguard its open economy, signaling awareness of vulnerability despite its strong tax revenue base.
Finland cuts GDP growth forecasts due to tariffs, trade policy uncertainty
Finland revised down its 2025 GDP forecast to approximately 1.0% (from 1.7%), citing U.S. tariffs and broader international policy uncertainty as key factors reducing investment appetite.
Insight
The revision highlights Finland’s exposure to global trade volatility. Reduced growth may prompt targeted fiscal interventions to support key sectors without undermining fiscal health.
Croatian consumer prices rise 3.5% in May on the year
Consumer prices in Croatia increased by 3.5% year‑on‑year in May. Rising costs in restaurants (+9%), food & beverages (+5.7%), utilities, education, and leisure drove inflation, while transport and clothing prices fell.
Insight
The broad nature of inflation—with services and utilities leading—signals ongoing cost-of-living pressures. Persistent inflation in hospitality could erode household budgets and challenge economic recovery.
