Lagarde warns that the tariff war will trigger inflation

It will be consumers who pay the exchange of tariffs between the US administration and the community authorities. The president of the European Central Bank (ECB), Christine Lagardehas warned about the consequences of the commercial “eye” between Washington and Brussels and has estimated that 25% tariffs imposed by the United States to imports of European products will reduce eurozone growth by approximately 0.3 points percentage during the first year. “A European response in the form of increased tariffs on imports from the United States would further increase this figure to approximately half a percentage point,” Lagarde also calculated during his speech in the Commission of Economic and Monetary Affairs of the European Parliament.

The BCE president has pointed out that the greater impact on economic growth «It would concentrate around First year After the increase in tariffs “and then,” it would decrease over time, although it would leave a Persistent negative effect on the production level». In this sense, he has warned that in an interconnected world, “the increase in commercial friction is detrimental to global growth and well -being” because they “raise costs, disturb production and, often, lead to an adjustment of supply chains.” “This also encourages the policies of ‘eye for an eye’, even more undermining the benefits of free trade,” he stressed, before remembering that in such a scenario, inflation perspectives would become “significantly more uncertain.” “In the short term, the EU retaliation measures and a weaker euro exchange rate, resulting from a lower American demand for European products, could raise inflation around half a percentage point,” said Lagarde. In his opinion, “the effect would decrease in the medium term because the lower economic activity would cushion inflationary pressures.”

In addition to talking about the consequences of tariffs, Lagarde has exposed to MEPs the evolution of the MONEARY policy of the ECB and has assured that «We are determined to ensure that inflation is stabilized sustainably in our goal of 2% in the medium term And we will follow a data -dependent approach and meeting by meeting »and has influenced the fact that” current estimates on the macroeconomy of the euro zone are subject to a very high uncertainty. ” In current and exceptional circumstances, the ECB considers pertinent reassess the inflation objective that by statutes must pursue the ECB. Lagarde has reported that “the interruption of the objective is still under investigation” and that “a great audit firm will be hired to investigate the interruption of the objective.”