economic situation
ECB Vice: Trade conflicts threaten the euro economy
The economy in the euro area is weakening. There is now a threat of further headwind from the USA. This worries the ECB.
The European Central Bank (ECB) sees growing risks for the already weak economy in the euro area due to possible trade conflicts. “Trade policy tensions could continue to increase,” said ECB Vice President Luis de Guindos at the start of “Euro Finance Week” in Frankfurt. “This economic headwind reinforces the structural problems of low productivity and weak potential growth in the euro area.”
US President-elect Donald Trump has announced new tariffs of 10 to 20 percent on imports from Europe. Economists fear a trade war with the European Union. If Trump actually imposes a 20 percent tariff on imports from the EU and a 60 percent tariff on imports from China, German exports to the USA could fall by 15 percent, estimates the Munich Ifo Institute.
When asked about the ECB’s further monetary policy course, de Guindos replied: “I think the direction of monetary policy is clear.” The ECB has already cut key interest rates three times this year. The deposit interest rate that banks receive for parked funds, which is the benchmark on the financial market, is now 3.25 percent. Economists expect another rate cut at the next Governing Council meeting on December 12 and further steps lower next year.
Information about the event
dpa
Source: Stern
