Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

The Trump administration will press Russia to accept Ukraine’s right to maintain its own military and defense industry as part of any peace deal, we’re told. US envoy Steve Witkoff is expected to raise the issue directly with Russian President Vladimir Putin when they next meet. It’s a key shift in the US approach, which critics say has largely favored Moscow and asked little from the Kremlin. The plans could still change, but for now they include Ukraine getting the Zaporizhzhia nuclear plant back —  though ceding its administration to the US — and keeping secure access to the Dnieper River. After Russia today carried out the most intense airstrike this year, Ukrainian President Volodymyr Zelenskiy reaffirmed his refusal to cede territory.

— Michal Kubala

What’s Happening

New Playbook | The ECB is set to rethink its strategy, we’re told, as economic shocks become more frequent and unpredictable. At an informal retreat next month, officials will debate how to make monetary policy more flexible — which may lead to changes in how the central bank analyzes growth and inflation, and deploys monetary policy instruments.

Charm Offensive | While Donald Trump drives a wedge between the US and EU with trade tariffs, China appears to be pushing for deeper ties with the bloc. President Xi Jinping is preparing to lift sanctions on a handful of EU lawmakers — a goodwill gesture that could be a prelude to reviving trade talks and improving relations. 

Recession Unlikely | Despite rising trade tensions, the euro zone isn’t headed for recession, ECB chief economist Philip Lane told Bloomberg TV. He said growth will slow, but not stall, while the bloc seeks to broaden commercial ties with other nations and the bank continues rate cuts. Governing Council member Olli Rehn said the bank shouldn’t exclude a larger reduction.

Kenya Deal | The EU was Kenya’s biggest trade partner in 2023. Now, the bloc is aiming to double trade with the East African nation after sealing a new economic partnership that grants it duty- and quota-free access to its markets — a catalyst for growth in commerce.

Tariff Optimism | German Finance Minister Joerg Kukies expressed optimism that a resolution to the US-EU trade spat is possible within Trump’s 90-day tariff pause. Kukies pointed to productive talks with his US counterpart, Scott Bessent, and global economic headwinds as reasons for hope that cooler heads could prevail.

Around Europe

Credit Pivot | As trade tensions and political volatility weigh on US markets, global investors in private credit are looking to Europe for stability — and opportunity. While it may take months for lenders in Europe to reap the benefits of this shift, fund managers are seizing their moment amid the “Sell America” shift.

Election Probe | Romania’s far-right presidential frontrunner George Simion is under scrutiny after reports surfaced of a $1.5 million lobbying deal with a US firm — just days before a pivotal vote. It’s the latest twist in an election that is testing the Black Sea nation’s ability to stave off a rising far right.

Rate Freeze | All the economists we surveyed expect Russia to keep interest rates at record highs, even despite early signs of easing inflation. The country's central bank is considering risk scenarios like rising global tensions or the price of oil going down drastically. If realized, the result could be inflation rising to 15% and the economy tipping into recession.

Tariff Hits | Irish Finance Minister Paschal Donohoe struck a confident tone when speaking to us about the effect of global trade tensions on his country’s small, open economy. He said Ireland is monitoring any US companies’ plans to reshore production, but sounded optimistic about keeping them in Ireland.

Chart of the Day

Russia is drilling oil at a pace not seen in years, preparing for the easing of OPEC+ restrictions and holding out hope that international sanctions will be lifted. Yet even as it looks to boost output, investment in exploring new reserves is lagging amid a number of economic uncertainties and technological challenges.

Today’s Agenda

All times CET

• 9:45 a.m. EU chief diplomat Kaja Kallas holds press conference with Azerbaijan’s foreign minister, Jeyhun Bayramov, in Baku
• NATO chief Mark Rutte in Washington to meet US officials
• Economy Commissioner Valdis Dombrovskis attends IMF/World Bank meetings in Washington, meets US Treasury Secretary Scott Bessent
• Financial services chief Maria Luis Albuquerque meets Fed Chair Jerome Powell