European Central Bank's Lagarde warns of "extreme uncertainty" and calls for fiscal and reform efforts to work together.

Against the backdrop of escalating global trade tensions and the impact of US tariffs on Eurozone exports, the European Central Bank announced a 25 basis points cut in its main interest rates on Thursday. This is the seventh interest rate cut by the bank in the past year, aimed at boosting the weak Eurozone economy through a more accommodative monetary policy. ECB President Christine Lagarde stated at a press conference after the meeting that the decision to cut interest rates received unanimous approval, although different options were discussed during the meeting. No member advocated for a more aggressive 50 basis points cut, showing that the Monetary Policy Committee, in the current high uncertainty environment, leans towards cautious operations. Lagarde pointed out that US tariff measures have clearly had a "negative demand impact" on the Eurozone, with their suppressive effect on economic growth already evident, although the final impact on inflation still needs to be observed. At the same time, escalating global trade disruptions have not only increased market uncertainty, but may also put further downward pressure on Eurozone inflation through multiple channels such as falling energy prices, the appreciation of the Euro, and declining export demand. She specifically noted that exports from countries with excess capacity redirected towards the Eurozone market may also intensify internal industrial competition. Furthermore, Lagarde warned that the intensification of global trade frictions and the resulting uncertainty are significantly increasing the downside risks faced by the Eurozone economy; trade contraction will directly impact export performance, thereby stifling business investment and consumer spending. If financial market sentiment deteriorates further, financing conditions may tighten, lowering the risk appetite of businesses and households, and exacerbating economic slowdown. Despite this, Lagarde welcomed the increase in defense and infrastructure spending by some Eurozone countries as it will provide certain support to economic growth. However, she also emphasized that relying solely on monetary policy is difficult to address current challenges, and fiscal policy and structural reforms need to be coordinated and strengthened. She called on member states to accelerate relevant reform measures to enhance productivity, competitiveness, and economic resilience, in order to strengthen the overall risk resilience of the Eurozone. Faced with the dual pressure of escalating external shocks and limited internal policy space, Lagarde admitted that the current economic outlook is "shrouded in extreme uncertainty". The future policy path of the Eurozone will continue to be constrained by multiple variables and needs to reserve space for further policy adjustments while maintaining stability.