Uncertainty in the financial markets about the outcome of an ECB interest rate decision shortly before the central bankers' meeting has been a rarity recently. This time, however, it is not possible to say with any degree of certainty what exactly the ECB Governing Council will announce on Thursday. An interest rate cut has already been virtually decided on. However, the central bankers could move to ease by 50 basis points, even if 25 basis points seems to be the more likely option.

Those in favour of a big move point to the weakening economy in the eurozone. Despite real wage gains, private consumption is still not picking up as expected and is, therefore, currently failing to drive growth. It is unlikely that this will change in the near future. The break-up of the traffic light coalition government in Berlin, and the fall of the government in Paris, as well as the deterioration in the labour market, have increased uncertainty for consumers. Not a good environment for improved consumer sentiment – or more investment by companies and private households.

Donald Trump's election victory has also worsened the prospects for the export-orientated European economy. The punitive tariffs threatened by Trump, and possible countermeasures by other countries, could hit global trade hard. It is little consolation for European exporters that the euro is likely to lose value against the dollar, which is favourable for US importers.

However, the meagre growth prospects are not in themselves a reason to loosen monetary policy. The ECB has no growth mandate. It must focus on price stability, which it believes means a medium-term inflation rate of 2%. Though Of course, the ECB must also look at the economic data. After all, if the economy is performing poorly, there will be less demand. This, in turn, leads to low inflationary pressure if supply remains constant.

It is, therefore, possible that future US trade policy will require the ECB to cut interest rates more quickly and/or more sharply in 2025. However, this is not certain. Not only because there is a lot of uncertainty about what exactly Trump will implement, and how other players, such as the EU or China, will react. The effect of US punitive tariffs on euro inflation – and this is the decisive factor for the ECB – is also unclear.

This is because there are also arguments as to why Trump's economic plans could ultimately fuel euro inflation. Firstly, tariffs in themselves have a price-increasing effect. Secondly, the increasing trade conflicts could also lead to supply chain disruptions. This also leads to higher inflationary pressure. In addition, in view of the tense geopolitical situation – and not just because of Trump – companies could increasingly rely on reshoring, which would at least initially lead to price increases due to inefficiencies. Furthermore, a stronger dollar compared to the euro will, in many cases, make it more expensive for European companies to import energy and other raw materials.

Whether, on balance, the inflationary effects outweigh the deflationary effects, or vice versa, is a matter of debate among economists, even if the trend is slightly inflationary. In view of the many uncertainties, Trump's election victory should not tempt the ECB to cut interest rates by 50 basis points on Thursday.

Especially as the central bank is well on the way to achieving its inflation target, though this is by no means a foregone conclusion. At 2.7%, the core rate as an indicator of the underlying inflationary pressure is still too high. Wage growth as a driver of services inflation has repeatedly turned out to be stronger than expected by the ECB. This was most recently the case in the third quarter. There is, therefore, much to be said in favour of a cautious approach to easing monetary policy, so as not to feed the greedy beast of inflation unnecessarily.