FRANKFURT (Reuters) – U.S. tariffs will be a massive drag on global growth and the European Central Bank will do its part to support Europe but the solution lies in more unity on the continent, ECB policymaker Joachim Nagel said on Tuesday.
Stocks have fallen sharply since U.S. President Donald Trump unveiled tariffs targeting most nations and markets are now pricing in a possible recession in some of the world’s biggest economies as trade fragmentation raises costs and slows activity.
“Global growth prospects have deteriorated massively,” Nagel said in an emailed statement. “Monetary policy in Europe will do its part … We are already well on our way to achieving our inflation target this year.”
The ECB has cut interest rates six times in the past year and a long list of policymakers have already made the case for another move on April 17 as weaker growth, lower energy costs, higher corporate bond yields and a stronger euro are all pointing in the direction of a further slowdown in inflation.
“At the upcoming meeting of the ECB Governing Council next week, we will make responsible decisions based on the data and information available,” Nagel added.
Nagel said the turmoil strengthens the case for Europe to become even more cohesive, including via a banking and capital-markets union.
“Ultimately, there must be a Europe that stands closer together,” Nagel said.
He called for a new German government to be formed rapidly and to invest in sectors including infrastructure and digital technology.
(Reporting by Balazs Koranyi and Francesco Canepa; Editing by Alison Williams and Emelia Sithole-Matarise)
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