Central banks

Manufacturing activity in the euro area rebounded in early 2025, while services activity slowed, marking a reversal of the trends observed in the previous two years. This box analyses the role of frontloading effects and trade policy uncertainty in driving recent production dynamics. It argues that manufacturing benefited temporarily from frontloading ahead of US tariff measures, while services were more directly affected by rising trade policy uncertainty. In particular, hard data reveal that manufacturing subsectors with higher exposure to the United States (e.g.

This article uses a suite of macroeconomic models to assess the economic impacts of an increase in euro area defence spending. Multipliers of government purchases average just below 1, and there is notable model uncertainty. Pressures on HICP (Harmonised Index of Consumer Prices) inflation increase only gradually over time. An analysis of the transmission channels suggests that private sector expectations of higher future interest rates and taxes may substantially reduce fiscal multipliers.

Vitaly M. Bord, Agnes Kovacs, and Patrick MoranIn the United States, credit card companies frequently use machine learning algorithms to proactively raise credit limits for borrowers. In contrast, an increasing number of countries have begun to prohibit credit limit increases initiated by banks rather than consumers.

The level of attention paid to inflation affects people’s inflation expectations and, in turn, price and wage-setting decisions. This box puts forward a measure of inflation attention based on a substantial corpus of newspaper articles from the largest euro area countries. The measure is derived from the proportion of articles that contain inflation-related keywords. The indicator spiked during the recent high inflation period, reflecting an increased focus on price developments.