In what is starting to resemble monetary déjà vu, the European Central Bank has just cut interest rates for the seventh time since last June. That’s right – seven cuts, and still counting – in a bid to stave off a growth crisis made worse by global trade tensions. The deposit rate now stands at 2.25%, down another quarter point, as if monetary policy were the only lever left in a toolkit increasingly short on screws.

Gone from the ECB’s statement is the once-cherished word “restrictive,” which used to signal some semblance of restraint. Markets, never ones to let nuance slip by, immediately priced in further cuts. Three more are now expected before year-end – because if monetary easing hasn’t worked the first six times, surely the seventh, eighth or ninth will do the trick.

ECB President Christine Lagarde didn’t mince words: “Downside risks to growth have increased,” she said in Frankfurt, just before insisting that the full impact of Trump’s tariff tantrums is still unfolding. Translation: we’re flying blind, but gently pressing the accelerator anyway.

The euro duly slumped, falling 0.6% to $1.336, and German 10-year yields eased to 2.5%. As for monetary policy, officials now say it sits within “neutral territory” – that mysterious middle ground that somehow neither stimulates nor suppresses growth. Lagarde went one better, dismissing the whole neutral rate concept as “meaningless.” In this data-dependent wonderland, policy is more clairvoyance than calculus.

To be fair, the ECB is under siege. On one front: a transatlantic tariff barrage courtesy of Donald Trump. On the other: an energy price collapse and plunging confidence indicators. Add to that the awkward truth that inflation, far from raging, is retreating – headline CPI came in at just 2.2% in March, and service inflation eased to 3.5%.

And yet, therein lies the rub.

With consumer prices sinking, why continue to cut? Why risk losing credibility as inflation fighters just as imported tariff shocks threaten to unleash a new wave of price pressures? The ECB’s answer appears to be that we must do something, and this is something.

Goldman Sachs, Deutsche Bank, and Bank of America now see deeper cuts ahead. But if the ECB truly believes it is entering “uncharted waters,” then betting the farm on lower rates in the face of rising uncertainty may look, in hindsight, less like bold policy and more like wishful autopilot.

Lagarde admits that Europe faces “exceptional uncertainty” – making the ECB’s confident path toward a 1.5% terminal rate by year-end look increasingly like monetary Russian roulette. Indeed, with Trump’s tariff war spiralling and key US-EU trade exemptions on a 90-day fuse, the danger is that Europe will import deflation today and inflation tomorrow.

Meanwhile, the Fed – caught between a weakening US economy and sticky inflation – has opted for caution. Unlike his ECB counterparts, Powell isn’t slashing for the sake of momentum. That difference in tone could prove critical. While the Fed waits for clarity, the ECB is writing cheques on a future that’s anything but guaranteed.

As history teaches us (see the 2011 Trichet hike or 2008’s pre-crisis orthodoxy), central banks that ignore structural shocks or misread inflation risk rarely fare well. This is a dangerous time to assume that just one more cut is always the answer.

If Europe’s economic woes deepen—and if imported inflation does rear its head—the ECB may find itself cornered, its credibility in tatters, with no rates left to cut and nothing left to blame but its own overconfidence.

Or, to borrow Lagarde’s own words: “We must rely on solid and reliable data.” The question is whether the data will be reliable enough – and whether the ECB will listen when it arrives.