Despite nearing the end of its easing cycle, the European Central Bank (ECB) may still reduce interest rates one or two more times within the next six months. Ongoing tariff negotiations pose a risk to exports and short-term growth, potentially exerting downward pressure on inflation. However, these adverse effects will be partially mitigated by increased fiscal spending. As this spending focuses on infrastructure and supply, its impact is expected to be gradual but could yield a positive supply-side effect.
