ATHENS – European Central Bank policymaker Yannis Stournaras said on Tuesday that likely higher inflation and a global trade war following U.S. President Donald Trump’s imposition of tariffs could delay normalization of euro zone monetary policy.
“Any further resurgence in inflation or inflation expectations could delay or even halt the process of monetary policy normalization, worsening financial conditions and growth momentum,” Stournaras, who is governor of the Bank of Greece, said at the Greek central bank’s annual shareholders’ meeting.
As well as the United States and Europe, other countries where the U.S. has not imposed duties would feel the pinch of slowing global trade, he said.
A rout in global financial markets triggered by the U.S. tariffs scheme has solidified the case for another ECB rate cut next week and supports arguments for even quicker policy easing from the world’s second largest central bank, economists say.
(Reporting by Lefteris Papadimas; Writing by Angeliki Koutantou; Editing by Susan Fenton)
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