FX.co ★ ECB Cautions on Inflation Risks, Keeps April Policy Options Open: Minutes

European Central Bank officials have expressed concerns that U.S. tariffs, along with any retaliatory actions, could result in increased inflation, particularly in the short term. As noted in the minutes from the March monetary policy meeting, the officials highlighted the risk that heightened government expenditure—especially in areas like defense and other fiscal initiatives—might exacerbate price pressures and potentially hinder the disinflationary trend. Furthermore, policymakers clarified that the updated policy statement should not be perceived as an indication of an impending rate reduction or a pause in April. They recognized the mounting uncertainty surrounding the restrictiveness of current monetary policy, given that interest rates have already been reduced substantially, while still allowing for the possibility of future cuts.