Trump tariffs won’t derail easing plans – ECB’s Villeroy

European Central Bank Governing Council member François Villeroy de Galhau stated on Thursday that potential trade tariffs under Donald Trump’s second presidency term would not derail the ECB’s easing trajectory.

Speaking in Tokyo, Villeroy noted that US tariffs are unlikely to significantly impact Europe’s inflation outlook, which is shifting downward alongside growth risks.

The ECB cut its deposit facility rate by 25 basis points to 3.25 per cent in October, its third reduction this year, with more cuts anticipated. However, policymakers, including Villeroy and Germany’s Joachim Nagel, remain divided on how global economic fragmentation could influence inflation volatility and policy decisions.

The ECB is expected to announce another rate cut at its December 12 meeting, but the extent of future moves remains uncertain. Villeroy emphasised the need for flexibility, describing the ECB’s approach as “agile pragmatism” to maintain policy options.

Despite recent eurozone wage growth reaching its highest level since 1999, Villeroy downplayed the significance, attributing it to delayed effects of prior negotiations, particularly in Germany, and confirming it aligns with the ECB’s projections.

Attribution: Bloomberg

Subediting: Y.Yasser