Francois Villeroy de Galhau, European Central Bank (ECB) Governing Council member and the head of the Bank of France, said the potential trade tariffs announced by Donald Trump would not have a significant impact on inflation in the eurozone and would not hinder the ECB's plans to further cut interest rates.
During his election campaign, Trump said he wanted to raise tariffs on imports from a number of countries. Experts warn that if the European Union decides to take retaliatory measures, prices of goods imported from the United States will rise, and a weaker euro could also lead to higher inflation. However, Villeroy de Galhau said that the impact of these measures on inflation will be modest, but the prospects for economic growth may worsen.
Last month, the ECB cut its interest rate for the third time since June in response to slowing consumer inflation. Villeroy de Galhau said that monetary policy easing should continue, but the pace of this process should be decided by "agile pragmatism".
However, yesterday's data showed that in the 3rd quarter, negotiated wages in the eurozone grew at the fastest pace since the beginning of 1993, threatening to push prices higher in the labor-intensive services sector. The head of the Bank of France noted that this growth did not come as a surprise to policymakers and rather reflected past events in Germany, namely the lagged effects of past negotiations.