In a speech today, Finnish ECB Governing Council member Olli Rehn highlighted the potential damage that US tariffs could inflict on global economic activity.
According to Bank of Finland estimates, import tariffs of 25% on US imports from the Eurozone and 20% on imports from China, along with reciprocal measures by those regions, would shave more than 0.5% off global output this year and next
Rehn stressed that this looming trade conflict would carry both deflationary and inflationary implications for Europe. “It’s worth recalling that if growth were to slow down in the world economy and euro area economy compared to forecasts, that would weigh on inflation downwards,” Rehn said.
Given this uncertainty, he noted that ECB will assess fresh economic data ahead of its April meeting before committing to additional rate cuts or a pause.
