<h1>Monetary policy pressured by US tariffs and defence-led fiscal expansion may force ECB to balance growth support and inflation.</h1> Euro-area monetary policy faces conflicting pressures as the ECB prepares a modest rate reduction amid weak growth. Potential US tariffs could slow export-led activity, while large-scale fiscal expansion-notably increased defence spending and relaxed borrowing limits in Germany-could boost growth and inflation. The ECB must balance lower rates to support activity against the risk of persistent inflation from fiscal stimulus, remaining flexible and data-dependent when deciding future rate steps.