By Fédéric Holm-Hadulla and Sebastiaan Pool | Central banks usually seek to align very short-term interest rates in the money market with their own policy rate. But money market rates fluctuate also for reasons other than policy. This blog shows that monetary policy is more effective if such fluctuations are small.

Discussions about monetary policy usually centre on whether interest rates should go up, down or stay the same. The complexities of how monetary policy is carried out in practice often go unnoticed. We look behind the scenes to explore a key aspect in this regard: the way central banks manage fluctuations in short-term money market rates and how this matters for the effectiveness of monetary policy.
A primer on monetary policy transmission and implementation
When the ECB adjusts its policy interest rates, it sets in motion a chain reaction in the financial system and the economy that helps it steer demand and eventually control inflation. Economists usually refer to this process as the monetary policy transmission mechanism. The initial link in this chain is the money market, where banks and other financial institutions lend and borrow money for short periods of time.
Central banks implement their policy by aligning very short-term interest rates in the money market with their policy rates. They do this with a set of tools and technical procedures collectively known as the operational framework. However, central banks typically do not fully control money market rates. In fact, these may fluctuate also for reasons unrelated to policy – for instance, owing to the ups-and-downs in banks’ daily liquidity needs.
In more detail, central banks provide money – or reserves – to banks and accept their deposits. Further, they set the interest rates applying to these transactions. This creates natural bounds on how much short-term money market rates would typically fluctuate: if market rates are higher than the ECB lending rate, banks would come to the ECB to borrow, as this would be cheaper than taking up money from other commercial banks in the market. In turn, if market rates are below the rate banks get from depositing reserves with the ECB, again they would rather come to the ECB to park their money at a higher return. Within this band between the ECB’s rates for lending and deposits, market rates are determined by the supply of and demand for reserves.[1]
This system ensures that central banks have a certain degree of control over market rates. Following a recent review of how monetary policy is implemented, the ECB decided to narrow the ‘width’ of this band (for additional detail on the new framework, see also this recent blog by Claudia Buch and Isabel Schnabel). The ECB did this to “limit the potential scope for volatility in short-term money market rates”. At the same time, it kept some distance between the ECB rates to “leave room for money market activity and provide incentives for banks to seek market-based funding solutions”.
How does short-rate volatility influence transmission?
In Holm-Hadulla and Pool (2025), we present empirical evidence for why, as part of this balancing act, limiting volatility in short-term interest rates is an important consideration.
The rationale is that volatility in short-term rates creates uncertainty, and uncertainty typically leads to a preference for maintaining the status quo when it is costly to change current practice (Dixit, 1991). Banks, for example, would usually transmit a change in money market rates into the interest rates on the loans they grant to their customers. But if volatility is very high, they will be less certain that the change in money market rates will last. Hence, banks may also be less willing to alienate for instance a long-standing customer with abrupt and frequent changes in borrowing costs. Instead, with high volatility, banks will be more inclined to just wait and see.
This is indeed the pattern we observe in the data: as short-rate volatility rises, bank lending, output and the economy-wide price level become significantly less responsive to monetary policy. To see this, we compare how these variables respond to a change in the monetary policy stance when volatility is relatively low and when it is relatively high. Chart 1 illustrates the impact of volatility for the case of an unexpected interest rate hike (the results also hold for a surprise rate cut). It shows that the reduction in bank lending to firms and households is more than twice as strong with low than with high volatility. Moreover, this dampening effect also appears at the later stages of monetary policy transmission, including the medium-term effects on output and prices. For instance, for a 25-basis-point exogenous increase in policy rates, we estimate that the price level would, over the medium term, decline by more than half a percent in a low-volatility environment, while the effect is reduced to less than a quarter percent in a high-volatility environment.
A reduced effectiveness of monetary policy would then require stronger action from the ECB to achieve its objectives; and it may mean that policy rates – during periods of low inflation – will more often hit their lower bounds. Moreover, we observe that, in years in which volatility is high on average, it also swings around a lot from month to month (so it is not constantly high, but instead very high in some months and quite moderate in others). This further complicates monetary policy: central banks cannot simply assume that a situation of high volatility and weak transmission will persist. Instead, whenever they decide on monetary policy, it is uncertain how money market volatility will evolve. This, in turn, raises the risk of over- or underreactions to changing economic circumstances. Vice versa, containing money market volatility thus facilitates monetary policymaking.

Chart 1
Effect of an unexpected policy rate hike at different short-rate volatility levels

Percentages

Source: Holm-Hadulla and Pool (2025). Impact of an exogenous 25 basis point interest rate hike. High (low) volatility defined as one standard deviation (ca. 7 basis points) above (below) average. Circles are point estimates, whiskers are the 90 percent confidence intervals.

How did we come up with the findings?
Our research strategy starts from a technique called local projections to study the economic impact of unexpected changes in monetary policy, or “shocks”. We measure the shocks via the immediate financial market moves after monetary policy announcements. We then feed these into an empirical model, which uses historical data to see how economic indicators in the euro area tend to react to monetary policy over time. This helps us better understand the causal link between policy decisions and economic outcomes. Compared to earlier studies, a main novelty is that we allow the impact of monetary policy to differ, depending on how volatile short-term money market rates are in the period leading up to the shock. In doing so, we also ensure that the measured volatility is not itself an outcome of the current economic conditions, which could lead us to confuse the direction of causality. In particular, we focus on changes in volatility that have come as a side effect of other structural changes in the conduct of monetary policy, as opposed to reflecting current conditions.
Why does controlling volatility matter for policy?
To summarise, central banks face an interesting balancing act. With more scope for short term interest rates to move around, there is in principle more room for market forces to work, which often makes economic outcomes more efficient. However, if market rates fluctuate a lot, key actors in the economy may become more reluctant to respond to changes in monetary policy and this complicates the central bank’s task of controlling inflation. This balancing act is likely to become more prominent over the coming years: as central banks gradually reduce their supply of liquidity, market rates should become more sensitive to changes in commercial banks’ liquidity demand. The changes in the operational framework announced in 2024, including the narrower range between the ECB lending and deposit rates, will contribute to smoothening the transition to this new environment.
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.
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References:
Dixit, A. (1991). Analytical approximations in models of hysteresis. The Review of Economic Studies, 58(1), 141-151.
Holm-Hadulla F. and S. Pool (2025). Interest rate control and the transmission of monetary policy. ECB Working Paper No. 3048.

For ease of exposition, we abstract from a few additional complexities. First, the ECB has more than one lending rate. Second, the ECB can influence short-rate volatility also by injecting a lot of liquidity into the economy, for instance through asset purchases, which makes money market rates insensitive to the usual day-to-day changes in the demand or supply of reserves. Third, for reasons related to the interplay between banks and other financial institutions and owing to certain regulations, key money market rates have tended to settle somewhat below the ECB’s deposit rate in recent years.

 
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Member states’ representatives (Coreper) approved today the Council’s position (‘negotiating mandate’) on one of the Commission’s proposals to simplify EU rules and thus boost EU competitiveness. This proposal aims to increase the EU’s investment capacity to mobilise around €50 billion in additional public and private investments in support of certain EU policies, notably related to the Competitiveness Compass, the Clean Industrial Deal, defence industrial policy and military mobility. The proposed changes further seek to make it easier for Member States to contribute to the ‘Invest EU’ programme and simplify administrative requirements.

“Simplification of existing legislation is indispensable for boosting EU competitiveness. In the turbulent times we are living, today’s agreement in the Council is a first step towards unlocking additional investment opportunities that will certainly strengthen our economic position in the global arena.”
– Adam Szłapka, Minister for the European Union of Poland

The proposal forms part of the ‘Omnibus’ packages adopted by the Commission at the end of February 2025 with a view to simplifying existing legislation in the field of sustainability and EU investments. This proposal amends the ‘Invest EU’ regulation to help mobilise around €50 billion of investments by increasing the size of the EU guarantee and facilitating the combined use of the ‘Invest EU’ guarantee with existing capacity available under three legacy programmes: the European Fund for Strategic Investment (EFSI), the Connecting Europe Facility (CEF) debt instrument and the so-called ‘InnovFin debt facility’, an initiative launched by the EIB group in support of research and innovation. Moreover, the proposal increases the attractiveness of the ‘Invest EU’ member state compartment and reduces the administrative burden caused by reporting requirements, especially for SMEs.
Next steps
Following today’s approval of the Council’s negotiating mandate by Coreper, the presidency is enabled to enter interinstitutional negotiations (trilogues) with a view to reaching a provisional agreement with the European Parliament on this proposal.
Background
In October 2024, the European Council called on all EU institutions, Member States and stakeholders, as a matter of priority, to take work forward, notably in response to the challenges identified in the reports by Enrico Letta (‘Much more than a market’) and Mario Draghi (‘The future of European competitiveness’). The Budapest declaration of 8 November 2024 subsequently called for ‘launching a simplification revolution’, by ensuring a clear, simple and smart regulatory framework for businesses and drastically reducing administrative, regulatory and reporting burdens, in particular for SMEs. On 26 February 2025, as a follow-up to EU leaders’ call, the Commission put forward the above proposal, as one of two ‘Omnibus’ packages, aiming to simplify existing legislation in the field of EU investment programmes. On 20 March 2025, EU leaders urged the co-legislators to take work forward on the first two Omnibus packages as a matter of priority and with a high level of ambition, with a view to finalising them as soon as possible in 2025.
The proposal intends to improve the ‘Invest EU’ programme by increasing the EU guarantee by €2.5 billion (from €26.2 billion to €28.6 billion) and by enhancing the combination of available support from the EU budget with the ‘Invest EU’ programme and its three legacy programmes: the EFSI, the Connecting Europe Facility (CEF) debt instrument and the so-called ‘InnovFin’ debt facility, an initiative launched by the EIB group in support of research and innovation. Each of the two measures is expected to mobilise €25 billion of additional public and private investments.
Furthermore, the proposal aims to increase the attractiveness of the ‘Invest EU’ member state compartment, which focuses on specific national priorities. The proposal also aims to reduce the administrative burden of implementing partners, financial intermediaries and final recipients, with an estimated cost saving of €350 million. In particular, the proposal revises the definition of SME and reduces the number of indicators on which implementing partners will need to report for small-size operations not exceeding €100,000. It also reduces the frequency of reporting obligations from implementing partners, going from semi-annual to annual reporting.
 
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From Monday to Saturday, Commissioner Valdis Dombrovskis, in charge of Economy and Productivity, Implementation and Simplification, Commissioner Jozef Síkela, in charge of International Partnerships, and Commissioner Maria Luís Albuquerque, in charge of Financial Services and the Savings and Investments Union, are attending the 2025 Spring Meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) in Washington, D.C.  
Commissioner Dombrovskis will represent the European Commission at the sessions of the International Monetary and Financial Committee (IMFC) at the International Monetary Fund (IMF), and at the G7 and G20 Finance Ministers and Central Bank Governors meetings, where discussions will focus, amongst others, on support to Ukraine and on the impact of tariffs on the global economy. The Commissioner will hold several bilateral meetings on the margins of the Spring Meetings with his counterparts from the US, Ukraine, China, Japan, South Korea, and the United Kingdom. On Wednesday 23 April, Commissioner Dombrovskis will deliver a keynote speech at the Atlantic Council focusing on Europe’s competitiveness in the context of increasing geopolitical and trade tensions. Following the Spring meetings, Commissioner Dombrovskis will be in New York on 28 and 29 April, where he will engage in a series of high-level meetings with top officials from major financial institutions and global companies and visit the New York Stock Exchange, where he will meet with its President, Lynn Martin.
Commissioner Síkela will present and promote the EU’s Global Gateway Strategy as a strategic, mutually beneficial approach to development – focused on partner-driven priorities, combining investment into infrastructure with human development investments like education, training, healthcare – and helping create a conducive investment climate for private-sector engagement. He will represent the EU at the Plenary Session of the World Bank Development Committee and hold high-level bilaterals with government representatives, UN leaders, the IMF, and global investors, along with public appearances and private investor outreach to strengthen international cooperation in sustainable development under the EU’s leadership.
Commissioner Albuquerque will hold high-level meetings with government representatives, major institutional investors, nonprofit organisations and trade associations. On Wednesday, she will meet with the Governor of the People’s Bank of China (PBOC), Pan Gongsheng, and will participate at the Hudson Institute – Central & Eastern European Strategy Summit and in the Institute of International Finance (IIF) Global Outlook Forum. On Thursday, Commissioner Albuquerque will meet with India’s Finance Minister, Nirmala Sitharaman, and join a discussion on “The Future of Finance: Making Finance Work for the Economy” at Johns Hopkins University SAIS. On Friday, she will meet separately with US Treasury Secretary, Scott Bessent, to discuss financial regulatory matters, and with the Federal Reserve Chair, Jay Powell. Additionally, the Commissioner will participate in the US Treasury Regulatory Roundtable, which will address ongoing work on financial regulatory policies and explore the changing boundaries between bank and non-bank financial intermediaries.
 
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EIB Group President Nadia Calviño will lead an EIB Group delegation to meet   global partners and fellow Multilateral Development Banks in Washington DC
Boosting strategic investment to reinforce peace, prosperity and partnerships is at the heart of the EIB Group agenda
Announcements to include  new investments for energy security, climate action and accelerated support for Ukraine, as well strengthening cooperation with fellow Multilateral Development Banks

An EIB Group delegation led by President Nadia Calviño will participate in the 2025 Spring Meetings of the International Monetary Fund and the World Bank Group taking place this week in Washington DC. Vice-Presidents Ambroise Fayolle and Thomas Östros will join the EIB Group President to meet key partners in international development and finance.
Discussions will focus on building solid partnerships and deepening cooperation within the Multilateral Development Bank family.
On the margins of the Spring Meetings, the EIB Group is expected to sign agreements with partners, such as the EBRD and the World Bank Group to support sustainable development around the world.
The Group will also announce new investments with private sector partners for climate innovation in developing countries as well as financing for energy security.
Speaking ahead of the Spring Meetings, EIB President Nadia Calviño said,
“In these times of extreme volatility, we have three priorities in mind: peace, prosperity and partnership. That means support to the multilateral system, international cooperation and solid partnerships around the world, based on mutual respect and leading to win-win outcomes¨. 
“Our gathering in Washington is a timely and I welcome opportunity to take stock with our partners, to coordinate our actions and work together for a more peaceful, prosperous and sustainable world”.
The EIB President will also take part in the International Monetary Financial Committee Plenary sessions and will join other heads of the world’s Multilateral Development Banks for discussions on increasing  the collective impact of their financing around the world.
She will also take part in the 7th Ukraine Ministerial Roundtable at the World Bank, as well as updating partners on the EIB Group’s contribution.
As part of the EU response, the EIB has disbursed €2,2 billion since Russia’s invasion, with a recent agreement with the European Commission to guarantee a further €2 billion of financing under the EU‘s Ukraine Facility. Earlier this month the EIB signed three new agreements to provide the country with €300 million to restore and repair essential services and municipal infrastructure.
For more information about the EIB Group at the WBG/IMF Spring meetings visit:
https://www.eib.org/en/events/eib-at-spring-meetings
President Calvino and the EIB Delegation will also take part in a number of policy events and discussions which include:

Europe’s moment: building bridges to shared prosperity. President Calviño in  conversation with Cecilia Malmström

Date:                22nd April at 15h00
Venue:             Peterson Institute for International Economics
Follow online  – https://www.piie.com/events/2025/europes-moment-building-bridges-shared-prosperity

Reconstructing Ukraine—The Path Forward

With President Nadia Calviño, EBRD President Odile Renaud-Basso and Ukraine’s Finance Minister Sergii Marchenko
Date:                23rd April 9.00
Venue:             Council on Foreign Relations
Follow online – https://www.cfr.org

A Strong Europe in a Changing World

Conference and Q & A with students
Date:                23rd April at 10h45
Venue:             Georgetown UniversityEvents https://global.georgetown.edu/events
For any interview requests or any media request in the margins of the Spring Meetings, please reach out to the press contacts below.
 
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International aid from official donors fell in 2024 by 7.1% in real terms compared to 2023, the first drop after five years of consecutive growth, according to preliminary data collected by the OECD.
The fall in official development assistance (ODA) was due to a reduction in contributions to international organisations, as well as a decrease in aid for Ukraine, lower levels of humanitarian aid and reduced spending on hosting refugees in donor countries.
ODA by member countries of the OECD’s Development Assistance Committee (DAC) amounted to USD 212.1 billion in 2024, representing 0.33% of DAC members’ combined GNI.
“Pressures on development finance and developing countries’ growth are increasing,” OECD Secretary-General Mathias Cormann said. “Optimising the effectiveness of available official development assistance will help developing countries manage these fiscal pressures, make essential investments in growth, and protect the most vulnerable.”
Net ODA to Ukraine fell by 16.7% in real terms compared to 2023 and amounted to USD 15.5 billion, representing 7.4% of total net ODA. Humanitarian aid dropped by an estimated 9.6% in 2024, amounting to USD 24.2 billion.
ODA used to cover refugee costs within donor countries fell by 17.3% in 2024 compared to 2023 and amounted to USD 27.8 billion, representing 13.1% of DAC member countries’ total ODA, down from 14.6% in 2023. For five countries, in-donor refugee costs still represented more than a quarter of their ODA in 2024.
The United States continued to be the largest DAC member country provider of ODA (USD 63.3 billion), accounting for 30% of total DAC ODA in 2024, followed by Germany (USD 32.4 billion), the United Kingdom (USD 18.0 billion), Japan (USD 16.8 billion), and France (USD 15.4 billion).
“It is regrettable that ODA decreased in 2024 after five years of continuous growth. It’s even more concerning that some of the major donors have signalled further, and quite significant, decreases over the coming years.” OECD DAC Chair Carsten Staur said. “In this situation, it is paramount that ODA is invested where it is most needed, especially in the poorest and most fragile countries. Going forward, poverty eradication, the just green transition and governance should remain at the core, and we must also make ODA work harder in mobilising other sources of finance. Doubling down on aid effectiveness, together with partner countries, will be the key to achieve this.”
ODA rose in ten DAC member countries and fell in twenty-two countries. Only four countries exceeded the United Nations’ target of 0.7% ODA to GNI: Denmark (0.71%), Luxembourg (1.00%), Norway (1.02%) and Sweden (0.79%).
Net bilateral ODA for programmes and projects and technical assistance, excluding in-donor refugees and humanitarian aid, fell slightly by 1.2% in real terms, due in part to the reduction in ODA for Ukraine. Net debt relief grants remained low at USD 241 million.
Preliminary estimates show that net bilateral ODA flows from DAC members to Africa stood at USD 42 billion in 2024, representing a fall of 1% in real terms compared to 2023. Within this total, net ODA to sub-Saharan Africa was USD 36 billion, a decrease of 2% in real terms.
Net bilateral aid flows from DAC members to the group of least developed countries (LDCs) were USD 35 billion, a fall of 3% in real terms compared to 2023.
Links to aid data and background information:
Interactive charts showing ODA trends over time up to 2024: Official development assistance (ODA).
More detail on ODA statistics including the breakdown for 2024: O.N.E – Preliminary official development assistance levels in 2024.
For further information, journalists are invited to contact Spencer Wilson in the OECD Media Office (+33 1 45 24 81 18).

Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.

 
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Blog post by: Era Dabla-Norris, Davide Furceri, Mauricio Soto | Public approval is crucial for carrying out difficult reforms that can help countries lower debt and increase growth
Many countries struggle with low economic growth and high debt and will need bold fiscal actions to restore their finances. Two significant areas for potential savings are energy subsidies and pension systems. However, reforms in both areas can be unpopular with the public.
Public support is crucial for the success of these reforms, and governments can leverage various strategies to enhance this support. As highlighted in the April 2025 Fiscal Monitor, we developed a new method to gauge public sentiment by analyzing more than 2 million news articles tracking energy subsidy reforms in 170 countries since 1990 and pension reforms in 134 economies since 1960.
Effective reform involves well-designed changes that are introduced at the right time to gain more public support. Changes that happen gradually and during good economic times are usually viewed more favorably. Policies that focus on redistributing resources to those most affected, building trust in institutions, and communicating effectively can lessen public resistance to reforms. The money saved from these reforms can be used to support popular social programs and infrastructure projects that people can see and appreciate. Additionally, strong political commitment and a sense of ownership among leaders are crucial for gaining agreement and support for these changes.
Fiscal impact
Reforming energy subsidies and pension spending is crucial for improving public finances and promoting inclusive growth. And they can yield big returns.
On average, emerging and low-income countries spend 1.5 percent of their gross domestic product on energy subsidies, which is more than they allocate for social spending for poor people. Moreover, fuel subsidies mainly benefit higher income groups as they consume more fuel. By reducing these subsidies, countries can free up funds for other uses, eliminate price distortions, promote more efficient energy use, and foster long-term inclusive growth.
Pension spending accounts for 8 percent of GDP in advanced economies and 4 percent in emerging markets, with projections showing a sharp increase as populations age. Implementing pension reforms can help ensure the sustainability of retirement systems, and support employment, especially for the youth.
Sentiment matters
Making significant changes to energy subsidies and pension systems is challenging. Fuel price increases are always unpopular. And changes to social security systems can cause worries about contributing more money or having to work longer before retiring.
To successfully implement these reforms, it is essential to improve sentiment among key stakeholders in society. Our research shows that public support is the most important indicators of successful pension reforms, especially when families, civil society organizations, labor unions, and opposition groups back the changes. For energy subsidies, having positive public sentiment is almost as crucial as the actual changes in fuel prices.

How to bolster support
Policymakers can use various strategies to gain support for reforms. When possible, implementing gradual reforms allows individuals and businesses time to adjust, which can enhance public support. For instance, Colombia successfully implemented a two-year timeline for gasoline price adjustments. Sticking to this schedule helped build public trust and reduced resistance. However, while the government successfully removed gasoline subsidies, the process of eliminating costly diesel subsidies has been much slower.
Timely interventions during periods of strong economic growth allow for phased reforms that ease public concerns. This was evident in the case of Germany when the retirement age was successfully increased. Unfortunately, not all countries have the luxury of time. In Morocco, for example, the government had to quickly increase fuel prices by about 20 percent to address urgent budget pressures. This rapid increase demonstrated the government’s commitment, prepared citizens for future changes, and set the stage for fully eliminating subsidies.

Quickly compensating those affected by reforms can help build support and reduce concerns. Australia managed to increase the pension age while providing a substantial boost in old-age benefits, of over 10 percent for low-income retirees. However, some of these actions can have long-term consequences. For example, in response to the energy price surge in 2022, governments in Europe lowered taxes and provided cash transfers to ease public discontent. While these measures addressed immediate issues, they also postponed necessary adjustments to higher prices that will need to be made in the future.
Clear communication
Effective communication and engagement with stakeholders are essential for gaining public support for fuel subsidy and pension reforms. By clearly explaining how these reforms improve the country’s financial health and expand public services, concerns can be reduced, and support can be increased. In Morocco, a well-planned communication strategy was used to involve various groups during the fuel subsidy reform. This strategy highlighted that subsidies were not an effective way to provide social support, which helped alleviate worries and build backing for the reforms.
Ownership and political commitment are key to building consensus toward more ambitious reforms. In Uruguay, the president made raising the retirement age a central part of his government’s policy, and actively engaged with key political stakeholders to create consensus for the reform.
In conclusion, while gradual reforms during periods of economic prosperity are easier, many countries often need to make significant adjustments during challenging times. In both cases, public sentiment is very important for success. Governments must invest as much effort in clear communication, engaging in education and bringing along stakeholders as they do in the technical aspects of these complex reforms.
—This blog is based on Chapter 2 of the April 2025 Fiscal Monitor, “Public Sentiment Matters: The Essence of Successful Energy Subsidies and Pension Reforms.”
 
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Today, the European Commission adopted the 2025-2030 working plan for the Ecodesign for Sustainable Products Regulation (ESPR) and Energy Labelling Regulation.
The plan provides a list of products that should be prioritised to introduce ecodesign requirements and energy labelling over the next five years. This will foster sustainable, repairable, circular and energy efficient products across Europe,  in line with the Clean Industrial Deal and the Competitiveness Compass.
The priority products for ecodesign and energy labelling requirements are steel and aluminium, textiles (with a focus on apparel), furniture, tyres and mattresses. These were selected based on their potential to deliver on the circular economy.
Harmonised product sustainability requirements at EU level will reinforce the single market, prevent barriers to trade, improve the level playing field, reduce the administrative burden, and strengthen the global competitiveness of businesses offering sustainable products.
In addition, the Commission will introduce horizontal measures to requirements on repairability for products such as consumer electronics and small household appliances. This will include the introduction of a repairability score for products with the most potential, and requirements on recyclability of electrical and electronic equipment.
The selection of products included in the present working plan, is based on an inclusive process with stakeholders and reflects both the input from stakeholders and Member States. It is  based on a thorough technical analysis and criteria notably related to the EU’s climate, environment and energy efficiency objectives, as well as an extensive consultation process, including through the Ecodesign Forum.
Future ecodesign and energy labelling requirements for the selected products will cover two elements:

product performance, such as minimum durability, minimum energy and resource-efficiency, availability of spare parts or minimum recycled content;
and/or product information, including key product features such as the products’ carbon and environmental footprint. Product information will mainly be made available via the Digital Product Passport or, for products with energy labels, via the European Product Registry for Energy Labelling (EPREL).

When developing ecodesign requirements, the Commission will pay attention to the needs of SMEs, in particular micro-enterprises and small mid-cap enterprises, and will ensure that tailored support is available to them.
Next steps
Ecodesign and energy labelling requirements will be set via delegated acts on a product-by-product basis or for groups of similar products. This will be based on thorough preparatory studies and impact assessments. It will involve stakeholders and interested parties throughout the process, including in the recently established Ecodesign Forum.
Regarding some energy-related products, ongoing work under the Ecodesign Directive should continue, and relevant requirements will be adopted not later than 31 December 2026.
Background
The Ecodesign for Sustainable Products Regulation (ESPR) aims to improve the sustainability of products placed on the EU market by increasing their circularity, energy performance, recyclability and durability, while improving the Single Market and strengthening the competitiveness and resilience of the EU economy. Adopted in July 2024, it builds on the approach successfully pioneered under the EU’s current ecodesign and energy labelling frameworks.
Together with the Energy Labelling Framework Regulation (ELFR), the ESPR facilitates consumers’ choice in favour of more sustainable and energy efficient products.
Today’s working plan continues the work that started on 16 energy-related products (such as dishwashers, electric motors, electric vehicle chargers or displays) from the 2022-2024 ecodesign and energy labelling working plan.
 
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The European Union has paused its countermeasures on unjustified US trade tariffs to allow time and space for EU-US negotiations. 
The pause was first announced by EU Commission President Ursula von der Leyen last week, and takes legal effect tomorrow.
The decision – which puts on hold for up to 90 days the EU’s planned countermeasures against US tariffs on EU steel and aluminium imports – was made in response to the US delaying by 90 days its so-called reciprocal tariffs.
In total, the suspended EU countermeasures cover €21 billion of US exports.
As part of the EU’s push to find a negotiated outcome with the US, EU Trade Commissioner Maroš Šefčovič is today in Washington DC to hold meetings with his US counterparts in order to explore the ground for a negotiated solution.
As President von der Leyen made clear in her statement, the EU wants “to give negotiations a chance,” but should talks not prove satisfactory, the EU countermeasures will kick in.
In addition to these now-suspended countermeasures against US tariffs on steel and aluminium, preparatory work on further EU countermeasures continues.
The EU considers US tariffs unjustified and damaging, risking economic harm to both sides, as well as the global economy.
Next steps
The Commission has adopted two legal acts on 14 April which, respectively, impose and suspend its countermeasures:

The first act imposes the EU countermeasures.
The second act suspends all such measures until 14 July 2025.

Background
On 10 February 2025, the US announced that it would impose 25% tariffs on imports of steel and aluminium and derivative products. President von der Leyen immediately warned that such tariffs are “bad for business, worse for consumers” and would trigger a firm and proportionate European response. These US tariffs were imposed on 12 March.
The US tariffs of up to 25% apply on industrial-grade steel and aluminium, other steel and aluminium semifinished and finished products, and also their derivative commercial products (from machinery parts to knitting needles).
In response, the EU announced a swift and proportionate plan to impose countermeasures on US goods exports, while consistently stating its preference for finding a negotiated solution with the US.
On 9 April, EU Member States voted in favour of the European Commission’s proposal.
Later on 9 April, the US announced a 90-day pause on all universal tariffs impacting the EU, and the EU swiftly responded by announcing a pause on its intended countermeasures.
On 14 April, the Commission adopted two implementing acts – one that adopts the EU countermeasures, and another act that immediately suspends them.
Concretely, the first implementing act, which imposes the EU response:

Calibrates the 2018 measures reducing of the duty rate level to maximum 25% across the board and revising its scope (annex I).
Introduces the new package of countermeasures to respond to the expansion of the US tariffs to new products the increase of US tariffs on aluminium from 10 to 25% (annexes II-IV).

The second act suspends all measures until 14 July 2025.
For more information
Commission Implementing Regulation (EU) 2025/778 of 14 April 2025 on commercial rebalancing measures concerning certain products originating in the United States of America and amending Implementing Regulation (EU) 2018/886
Commission Implementing Regulation (EU) 2025/786 of 14 April 2025 suspending commercial rebalancing measures concerning certain products originating in the United States imposed by Implementing Regulation (EU) 2025/778 and amending Implementing Regulation (EU) 2023/2882
 
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NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the March 2025 Survey of Consumer Expectations, which shows that households’ inflation expectations increased at the short-term horizon, remained unchanged at the medium-term horizon, and ticked down at the longer-term horizon. Unemployment, job loss, and earnings growth expectations deteriorated. Household income growth expectations declined. Households were also more pessimistic about their year-ahead financial situations and credit access. Stock price expectations declined and reached the lowest level since June 2022.  
The main findings from the March 2025 Survey are:
Inflation

Median inflation expectations increased by 0.5 percentage point to 3.6% at the one-year-ahead horizon, were unchanged at 3.0% at the three-year-ahead horizon, and decreased by 0.1 percentage point to 2.9% at the five-year-ahead horizon. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentiles of inflation expectations) increased at the one- and three-year-ahead horizons and was unchanged at the five-year-ahead horizon.
Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—decreased at one- and five-year-ahead horizons and was unchanged at the three-year-ahead horizon.
Median home price growth expectations decreased by 0.3 percentage point to 3.0% in March. This series has been moving in a narrow range between 3.0% and 3.3% since August 2023.
Median year-ahead expected price growth increased by 0.1 percentage point for food to 5.2% (its highest level since May 2024), 0.7 percentage point for the cost of medical care to 7.9%, and 0.5 percentage point for rent to 7.2%. Median year-ahead price expectations fell by 0.5 percentage point for gas to 3.2% and 0.2 percentage point for the cost of college education to 6.7%.

Labor Market

Median one-year-ahead earnings growth expectations fell by 0.2 percentage point to 2.8% in March, equaling its 12-month trailing average. The series has been moving within a narrow range between 2.7% and 3.0% since January 2024.
Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—jumped 4.6 percentage points to 44.0%, the highest reading since April 2020. The increase was broad-based across age, education, and income groups.
The mean perceived probability of losing one’s job in the next 12 months increased by 1.6 percentage points to 15.7%, the highest level since March 2024. The increase was largest for respondents with annual household incomes below $50,000. The mean probability of leaving one’s job voluntarily in the next 12 months increased by 0.4 percentage point to 18.0%, remaining far below the 12-month trailing average of 19.7%.
The mean perceived probability of finding a job if one’s current job was lost decreased by 0.1 percentage point to 51.1%.

Household Finance

The median expected growth in household income decreased by 0.3 percentage point to 2.8% in March, falling below its 12-month trailing average of 3.0%. The decline was most pronounced for respondents with at most a high school degree and for those with annual household incomes under $50,000.

Median household spending growth expectations declined by 0.1 percentage point to 4.9%.
Perceptions of credit access compared to a year ago showed a larger share of households reporting it is harder to get credit. Expectations for future credit availability also deteriorated, with a larger share of respondents expecting it will be harder to obtain credit in the year ahead.
The average perceived probability of missing a minimum debt payment over the next three months decreased by 1.0 percentage point to 13.6%, remaining slightly above the 12-month trailing average of 13.4%.
The median expectation regarding a year-ahead change in taxes at current income level decreased by 0.2 percentage point to 3.2%.
Median year-ahead expected growth in government debt decreased by 0.4 percentage point to 4.6%, the lowest reading of the series since its start in June 2013.
The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.7 percentage point to 26.1%.
Perceptions about households’ current financial situations compared to a year ago deteriorated slightly, with a larger share of households reporting a worse financial situation compared to a year ago. Year-ahead expectations about households’ financial situations also deteriorated in March. The share of households expecting a worse financial situation in one year from now rose to 30.0%, the highest level since October 2023.
The mean perceived probability that U.S. stock prices will be higher 12 months from now dropped by 3.2 percentage points to 33.8%, the lowest level since June 2022.

About the Survey of Consumer Expectations (SCE)
The SCE contains information about how consumers expect overall inflation and prices for food, gas, housing, and education to behave. It also provides insight into Americans’ views about job prospects and earnings growth and their expectations about future spending and access to credit. The SCE also provides measures of uncertainty regarding consumers’ outlooks. Expectations are also available by age, geography, income, education, and numeracy.
The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,300 household heads. Respondents participate in the panel for up to 12 months, with a roughly equal number rotating in and out of the panel each month. Unlike comparable surveys based on repeated cross-sections with a different set of respondents in each wave, this panel allows us to observe the changes in expectations and behavior of the same individuals over time. For further information on the SCE, please refer to an overview of the survey methodology here, the FAQs, the interactive chart guide, and the survey questionnaire.
The SCE release calendar has been updated for the remainder of 2025. Please see dates here.
 
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Firms reported declining interest rates on bank loans, while indicating a slight further tightening of other lending conditions.
The bank loan financing gap remained almost unchanged, with firms reporting a reduced need for such loans alongside a slight decrease in availability.
Firms’ one-year-ahead median inflation expectations decreased slightly to 2.9%, down from 3%, while median inflation expectations three and five years ahead remained unchanged at 3.0%.

In the most recent round of the Survey on the Access to Finance of Enterprises (SAFE), covering the first quarter of 2025, euro area firms reported a net decrease in interest rates on bank loans (a net ‑12%, compared with a net ‑4% in the previous quarter), suggesting that monetary policy easing is being transmitted to firms. At the same time, a net 24% (a net 22% in the previous quarter) observed increases in other financing costs (i.e. charges, fees and commissions) (Chart 1).
In this survey round, firms indicated a reduction in the need for bank loans (net ‑4%, unchanged from the fourth quarter of 2024, Chart 2). At the same time, firms reported broadly stable availability of bank loans (a net ‑1%, down from a net 2% in the previous quarter). This left the bank loan financing gap – an index capturing the difference between the need for and the availability of bank loans – broadly unchanged (a net ‑1%, after a net 1% in the previous survey round). The current composite financing gap indicator – which includes bank loans, credit lines and trade credit as well as debt securities and equity – is reaching levels historically associated with periods of monetary policy easing. Looking ahead, firms expect a modest improvement in the availability of external financing over the next three months.
Firms continued to perceive the general economic outlook to be the main factor hampering the availability of external financing, as in the previous survey round (a net ‑21%, compared with a net ‑22%). A net 7% of firms indicated an improvement in banks’ willingness to lend (down from a net 8% in the previous survey round).
A net 6% of firms reported an increase in turnover over the last three months, unchanged from the previous survey round, with a significantly higher percentage of firms becoming optimistic about developments in the next quarter (a net 30%, up from a net 11%). More firms saw a deterioration in their profits compared with the previous survey round (a net ‑16%, down from ‑14% in the previous survey round). The survey indicates that the net percentage of firms reporting rising cost pressures had also increased over the past three months.
Firms’ expectations of selling prices over the next 12 months were unchanged, while expectations for wage costs slightly decreased, driven by lower expected pressures in the services sector (Chart 3). On average, firms’ selling price expectations remained unchanged at 2.9%, while the corresponding figure for wages was 3.0% (down from 3.3% in the previous round). At the same time, firms signalled a slight increase in other production costs (4%, up from 3.8% in the previous round).
Firms’ inflation expectations for the short term slightly decreased, while remaining unchanged at longer horizons (Chart 4). Median expectations for annual inflation one year ahead declined by 0.1 percentage point to 2.9%, while those for three and five years ahead saw no changes, standing at 3.0%. For inflation five years ahead, fewer firms reported balanced risks (30%, down from 33% in the previous round). A higher percentage of firms is seeing risks to the five-year-ahead inflation as being tilted to the upside (55%, up from 51% in the previous round), which was mirrored by a decline in the proportion of those perceiving risks to the downside (14%, down from 16%).
The report published today presents the main results of the 34thround of the SAFE survey for the euro area. The survey was conducted between 10 February and 21 March 2025. In this survey round, firms were asked about economic and financing developments over two different reference periods. Around half of firms were asked about changes in the period between October 2024 and March 2025. The remainder, all from the 12 largest euro area countries, were asked about changes in the period between January and March 2025. Additionally, firms also reported their expectations for euro area inflation, selling prices, and other costs. Altogether, the sample comprised 11,022 firms in the euro area, of which 10,167 (92%) had fewer than 250 employees.
For media queries, please contact Benoit Deeg tel.: +49 172 1683704.
Notes

The report on this SAFE survey round, together with the questionnaire and methodological information, is available on the ECB’s website.
Detailed data series for the individual euro area countries and aggregate euro area results are available on the ECB Data Portal.

Chart 1
Changes in the terms and conditions of bank financing for euro area firms

(net percentages of respondents)

Base: Firms that had applied for bank loans (including subsidised bank loans), credit lines, or bank or credit card overdrafts. The figures refer to rounds 27 to 34 of the survey (April-September 2022 to October 2024-March 2025).
Notes: Net percentages are the difference between the percentage of firms reporting an increase for a given factor and the percentage reporting a decrease. The data included in the chart refer to Question 10 of the survey. The grey panels represent responses for three-monthly reference periods, whereas the white panels relate to replies for six-monthly reference periods.

Chart 2
Changes in euro area firms’ financing needs and the availability of bank loans

(net percentages of respondents)

Base: Firms for which the instrument in question is relevant (i.e. they have used it or considered using it). Respondents replying “not applicable” or “don’t know” are excluded. The figures refer to rounds 27 to 34 of the survey (April-September 2022 to October 2024-March 2025).
Notes: The financing gap indicator combines both financing needs and the availability of bank loans at firm level. The indicator of the perceived change in the financing gap takes a value of 1 (-1) if the need increases (decreases) and availability decreases (increases). If firms perceive only a one-sided increase (decrease) in the financing gap, the variable is assigned a value of 0.5 (-0.5). A positive value for the indicator points to a widening of the financing gap. Values are multiplied by 100 to obtain weighted net balances in percentages. The data included in the chart refer to Questions 5 and Questions 9 of the survey. The grey panels represent responses for three-monthly reference periods, whereas the white panels relate to six-monthly reference periods.

Chart 3
Expectations for selling prices, wages, input costs and employees one year ahead, by size class

(percentage changes over the next 12 months)

Base: All firms. The figures refer to rounds 29 to 34 (September 2023 to March 2025) of the survey, with firms’ replies collected in the last month of the respective survey waves.
Notes: Average euro area firms’ expectations of changes in selling prices, wages of current employees, non-labour input costs and number of employees for the next 12 months using survey weights. The statistics are computed after trimming the data at the country-specific 1st and 99th percentiles. The data included in the chart refer to Question 34 of the survey.

Chart 4
Firms’ median expectations for euro area inflation by size class

(annual percentages)

Base: All firms. The figures refer to pilot 2 and rounds 30 to 34 (December 2023 to March 2025) of the survey, with firms’ replies collected in the last month of the respective survey waves.
Notes: Median firms’ expectations for euro area inflation in one year, three years and five years, calculated using survey weights. The statistics are computed after trimming the data at the country-specific 1st and 99th percentiles. The data included in the chart refer to Question 31 of the survey.

 
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