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European Central Bank Vice President Luis de Guindos told European lawmakers in Brussels on Monday that incoming data suggest that the Eurozone economy grew at a modest pace in the first quarter of 2025, per Reuters. Commenting on the inflation outlook, de Guindos said that he expects inflation to hover around the ECB’s 2% target. “Euro area exporters are now facing new barriers, and tensions in financial markets and geopolitical uncertainty will likely weigh on business investment,” he added. “In this environment, consumers may become cautious about the future and hold back spending.” Market reaction EUR/USD stays in its daily range following these comments and trades marginally lower at around 1.1350. ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in…

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Filed under: News - @ April 28, 2025 5:24 pm