ECB’s Wunsch: Weaker euro could mitigate US tariffs impact

European Central Bank (ECB) policymaker Pierre Wunsch said a weaker euro, potentially falling to parity with the US dollar, could cushion the impact of new US tariffs on eurozone growth, although it would increase inflation.

In an interview with Reuters, the Belgian central bank governor noted that the euro has already depreciated by 4-5 per cent against the dollar, and a move to parity could offset a 10 per cent tariff.

Wunsch also discussed the ECB’s rate policy, suggesting that market expectations of four more rate cuts in 2025 aligned with the central bank’s outlook.

However, he remained open to adjusting policy if inflation and growth data required it. He also indicated that the ECB’s strategy document might need to be revised to remove references to responding “especially forcefully” to below-target inflation.

Attribution: Reuters

Subediting: M. S. Salama