Inflation Slides To 1.9% In Europe, Where Trump’s Tariffs Rattle People

Inflation in the 20 countries that use the euro fell to 1.9% in May from 2.2% in April, clearing the way for more rate cuts from the European Central Bank (ECB) to support growth in the face of U.S. President Donald Trump’s tariff offensive, as per the Associated Press (AP).

Reductions in the ECB’s benchmark rate, currently at 2.25%, lower borrowing costs throughout the economy.

Lower energy prices helped bring consumer prices in May below the ECB’s 2% target for the first time since September.

Increasing signs that inflation is back under control after a painful outbreak from 2021 to 2023 leave room for the ECB to turn its attention to growing concerns about the impact of a slew of new import taxes on EU goods in the U.S., which threaten to slow Europe’s export-oriented economy.

Reductions in the ECB’s benchmark rate, currently at 2.25%, lower borrowing costs throughout the economy, making it easier to buy goods on credit and stimulating economic activity and investment.

Higher rates combat inflation, but for the moment, that battle appears to have been won. The ECB’s rate-setting council meets under Bank President Christine Lagarde to determine the next step on rates.

Analysts expect a cut of a quarter percentage point and anticipate that Lagarde will indicate at least one more cut is possible at future meetings.