French ECB Governing Council member Francois Villeroy de Galhau highlighted the global economic risks stemming from US President-elect Donald Trump’s plans to increase tariffs and implement tax cuts. Speaking at a retail investor conference in Paris, Villeroy noted that these policies could raise inflation in the US while dampening growth internationally.

While Villeroy acknowledged that the inflationary impact on Europe would likely be “relatively limited,” he emphasized the influence on European long-term interest rates.

“Long-term interest rates set by the market have a certain tendency to cross the Atlantic,” he remarked, suggesting that US policy changes could indirectly affect Eurozone markets.

“I don’t think it changes much for European short-term rates, but long-term rates could see a transition effect,” he noted.

In an interview with Helsingin Sanomat, ECB Vice President Luis de Guindos acknowledged the shifting priorities of the ECB as inflation continues to decline.

Inflation is expected to return to the medium-term target of 2% by 2025. At the same time, economic growth remains very weak. So “concerns about high inflation have shifted to economic growth”. he said.

Additionally, he highlighted the rising challenges posed by “geopolitical risks” and uncertainty surrounding US. trade and fiscal policies, which could have broader implications for the Eurozone economy.

Looking ahead, ECB’s December projections will offer further clarity, but De Guindos reiterated that if current forecasts hold, the central bank will “continue making our monetary policy stance less restrictive.”

De Guindos stressed the importance of a cautious, data-driven approach in such uncertain conditions, noting that “it’s difficult to make predictions about the specific number and size of rate cuts.” However, with inflation moving closer to the medium-term target, ECB appears set to maintain its easing bias.

Full interview of ECB’s de Guindos here.

In an interview with Les Echos, ECB Chief Economist Philip Lane highlighted that “monetary policy should not remain restrictive for too long”.

He explained the challenges of maintaining restrictive monetary policy stance for an extended period, cautioning that it could stifle economic growth and lead to inflation falling below ECB’s 2% target.

However, while markets currently assign a 50% probability to a 50bps rate cut in December, Lane appeared to moderate these expectations by emphasizing that inflation remains above target in key areas, particularly services, and that much of the recent decline stems from easing energy costs rather than broad-based price adjustments.

“There is still some distance to go in terms of adjustment for inflation to return to the desired level in a more sustainable way,” Lane noted.