Uncertainty is weighing on investment

European Central Bank (ECB) Governing Council member and Central Bank of Ireland Governor Gabriel Makhlouf said on Tuesday that “uncertainty is weighing on investment; soft data pointing to a significant cooling in business and consumer sentiment.” Additional quotes Global economic integration is now stalled, if not reversing; last few weeks have seen an acceleration in pace and scale of change. Even if a full-blown trade-war turns out to be short-lived, uncertainty effects will persist for some time. Monetary policy must adapt to the new nature of supply shocks generated by geoeconomic fragmentation. Given effects of size, scale and more persistent nature of fragmentation-induced shocks, and their impact on prices, monetary policy responses will need careful calibration. Threats of inflation de-anchoring, from both above and below, warrant forceful and persistent responses. Interest rate remains default policy lever in our toolbox; when constrained by lower bound, other tools such as targeted lending and balance sheet operations have their uses. Market reaction EUR/USD holds the rebound to near 1.1115 following these comments, up 0.22% on the day at press time. Source: https://www.fxstreet.com/news/ecbs-makhlouf-uncertainty-is-weighing-on-investment-202505130814