How to navigate tariff chaos: Five questions for the ECB

LONDON, April 14 (Reuters) - (This April 11 story has been refiled to clarify the meeting date in the first section)

The European Central Bank meets on Thursday with all focus on what the tariff chaos means for how much further policymakers will need to cut rates.

U.S. President Donald Trump first announced reciprocal tariffs around the world, including 20% on the European Union earlier in April before suddenly dialling back those duties last week for a 90-day period, whipsawing financial markets.

The resulting additional time to negotiate has barely relieved jittery markets and the outlook hasn't become any more certain. The U.S. excluded some electronics imports from steep tariffs on Friday, then said the move would be short-lived, the latest source of uncertainty.

"It will be very interesting how they (the ECB) walk that fine line between acknowledging what needs to be acknowledged without putting too stressed a tone to it," said Morgan Stanley chief European economist Jens Eisenschmidt.

Here are five key questions for markets:

1/ Will the ECB cut rates on Thursday?

Most likely.

Traders fully price a 25-basis-point cut, bringing the ECB's deposit rate to 2.25% on Thursday, a move they had seen as more of a coin toss before catching on that Trump's reciprocal tariffs were really on the way.

Societe Generale said it wouldn't rule out a larger 50 bps cut to more clearly exit a restrictive monetary policy stance.

Policymakers had previously looked more divided on an April cut, but several have since suggested that tariff developments have strengthened the case for a move.

2/ How will Trump's latest tariffs impact growth and inflation?

Hard to say, given negotiations ahead. But even with the 90-day reprieve, the EU is still being hit by a broad 10% tariff, not to mention higher rates on steel, aluminium and ...
[Short citation of 8% of the original article]