ECB President Lagarde Warns of Exceptional Shocks to Eurozone Economy; US Inflation Slows, Fed Rate Cut Unlikely Before 2026, Economists Say

ECB President Christine Lagarde cautioned that the Eurozone economy faces significant shocks from trade fragmentation, increased defense spending, and climate issues, potentially amplifying inflation volatility. She emphasized the ECB's commitment to its 2% inflation target amid these uncertainties. In the United States, inflation is expected to slow, but economists at Bank of America project the Federal Reserve will likely hold rates steady through 2026 due to a still-strong labor market and persistent inflation concerns. S&P Global projects that new tariffs, if fully implemented, will boost CPI by 50 to 70 basis points, with annual inflation to hover around 3% through 2025.