Mounting Inflationary Pressures in the Eurozone Ahead of Global Economic Shift
A recent survey conducted by the European Central Bank revealed that consumer expectations for inflation in the Eurozone rose significantly in March 2025, just before the escalation of global trade tensions fueled by recent U.S. tariff decisions.
According to the survey, which covered around 19,000 consumers across 11 countries in the region, inflation expectations for the next twelve months rose to 2.9%, compared to 2.4% previously
Geopolitical Shifts Disrupt Inflation and Growth Outlooks
This rise in expectations comes ahead of the United States imposing broad tariffs on most of its trading partners, sparking a trade war that threatens to undermine global economic growth. Although such a jump in inflation expectations would typically alarm the European Central Bank, the current economic context may alter the usual response.
The appreciation of the euro and falling energy prices are expected to contribute to slowing price growth in the coming period. Furthermore, potential shifts in global trade flows — including an influx of low-cost Chinese exports into European markets — may exert additional downward pressure on inflation.
In light of these developments, the ECB moved to cut interest rates again in April 2025, warning of increasing risks to economic growth, while some forecasts now suggest that the central bank may fail to meet its 2% inflation target over the medium term.
The bank’s analysis indicated that the world is undergoing a profound transformation in the way major economies interact, signaling a prolonged period of changes in the global economic, financial, and diplomatic landscape