European Central Bank policymaker Francois Villeroy de Galhau said on Thursday that tariff hikes under the new Trump administration do not change inflation expectations in Europe and urged the ECB to keep its options open.
President-elect Donald Trump has confirmed that he will impose new tariffs of at least 60% on Chinese imports and 10% to 20% on goods from elsewhere to rebuild the industrial base in the United States, in steps that economists say could disrupt trade flows and raise costs.
“The balance of risks to growth and inflation… is shifting to the negative side, and potential US tariffs are not expected to significantly change inflation expectations in Europe,” Villeroy said in a speech in Tokyo.
Villeroy, who also holds the position of Governor of the Bank of France, explained that the European Central Bank should continue to reduce the degree of monetary tightening by lowering interest rates.
Villeroy said the ECB’s future rate-cutting pace should be guided by “rapid pragmatism,” adding that the central bank reserves “full discretion for our future meetings.”
