TOKYO: Tariff hikes under the new Trump administration do not shift the inflation outlook in Europe, ECB policymaker Francois Villeroy de Galhau said on Thursday, urging the European Central Bank to keep its options open.
To rebuild the US manufacturing base, President-elect Donald Trump has said he would put new tariffs of at least 60% on Chinese imports and 10%-20% on goods from elsewhere in moves that economists say could disrupt trade flows and raise costs.
“The balance of risks on growth and inflation is shifting to the downside, and possible US tariffs are not expected to alter significantly the inflation outlook in Europe,” Villeroy said in a speech in Tokyo.
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Villeroy, who is also governor of the Bank of France, said the ECB should continue to reduce the degree of monetary tightness through interest rate cuts.
The pace of future ECB rate cuts should be guided by “agile pragmatism”, said Villeroy, adding that the central bank maintains “full optionality for our upcoming meetings”.
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