Tariffs Pave the Way for ECB Rate Cut This Week

Higher US tariffs will drive euro-area inflation lower than previously forecast, bolstering the case for the European Central Bank to cut interest rates this week. Analysts also expect the economy to grow 0.8% this year, a slight downward revision, a survey showed.

The survey, which doesn’t take into account US President Donald Trump’s decision to pause higher tariffs on much of the world, comes as the EU plans to send its trade chief to Washington to negotiate. Trump’s flip-flopping on tariffs has sown confusion among investors and trading partners alike, driving a slump in the dollar.

The euro hit its strongest level in three years late last week, and some traders are now betting it will go to $1.20. The Swiss central bank, meanwhile, potentially faces an uncomfortable choice between cutting interest rates below zero and selling the franc to stem its gains against the dollar. —

Dubai’s booming property market risks getting derailed by Trump’s plans for global tariffs. Among threats to values that have jumped 70% in four years is falling oil prices, which have dimmed the outlook for Gulf economies. In the UK, prices in London are likely to suffer more from the tariff fallout than in any other part of the country, real estate agents say.