Five questions for the European Central Bank

Written by Dhara Raninghe and Stefano Ribaudo

LONDON (Reuters) -The European Central Bank tends to reduce interest rates on Thursday, which is its eighth step in this session, with traders who stop stopping when following it with the economy appear better than expected attention and long -term inflation.

The uncertainty in the American customs tariff, which has increased the Tweis of the court’s conspiracy, makes the background difficult because the European Central Bank weighs any hit in the near term of commercial activity against the effects of inflation.

“The last thing the European Central Bank wants is to return unnecessarily to a world with a limited political room,” said Pimco Constantine Wallet manager.

Here are five main questions for the markets:

1/ What will the European Central Bank do on Thursday?

The price reduction will not be a surprise to the markets, whose price in a quarter of the deposit rates decrease to 2 % with inflation reduces, and the American definitions receive shades on the euro area.

The economy still limits only and the latest survey studies indicate only lukewarm optimism between companies as services appear amazingly weak.

“Reducing prices is an expired deal,” said the President of the Macro Carsten Barzeski. “Even hawks were not very frank.”

2/ After June?

There is an increasing consensus that the European Central Bank will stop in July, with another expected price reduction by the end of the year.

European Central Bank President Christine Lagarde is unlikely to give the confirmation they are looking for, while emphasizing the reliance on data.

In the short term, inflation can decrease further and even the bank’s goal lasts by 2 %, which enhances the issue to reduce another. However, factors, including increased government spending and definitions, can exacerbate price pressures in the long run.

A member of the European Central Bank and Politics Hawk Isabelle Shenbel is already preferred a temporary stop, saying that the definitions may be inflated in the short term but are higher risks. The European Central Bank says that the European Central Bank needs to find a “medium track”.

The head of the Swiss Rest Strategy Patrick Sner said that the European Central Bank may want to re -evaluate it during the summer.

“We look at a cautious, not an enemy,” Saner added.

3/ What does the United States’ trade tension/ European Central Bank mean?

Additional uncertainty.

The European Union has won the creation of US President Donald Trump’s tariff by 50 %. But it is still unclear how the bloc will increase for a useful trade agreement for both parties with the demands of the United States for sharp concessions.

“If the customs tariff ends up to 10-20 %, as we expect, I do not think it will be a major issue (for economic growth), and the European Central Bank will not interact much,” said David Zan, European fixed-off-income head at Franklin Templeton.