ECB Official Raises Alarm Over Trump's Tariffs

Yannis Stournaras, a member of the European Central Bank (ECB) Governing Council and Governor of the Bank of Greece, has issued a stark warning about the potential consequences of US President Donald Trump's comprehensive tariffs on the eurozone. Speaking to the Financial Times, Stournaras highlighted the risk of a "negative demand shock" that could significantly dampen growth across the region.

Impact on Growth and Inflation

Stournaras expressed concerns that the tariffs could lead to a slowdown sufficient to push inflation below the ECB's target of 2%, especially given the already "modest" economic prospects. He described the tariffs as "definitely a deflationary measure," underscoring the challenges they pose to the eurozone's economic stability.

Global Uncertainty and Economic Forecasts

The ECB official pointed to the "unprecedented" level of uncertainty generated by US trade policies, estimating that eurozone growth could suffer a reduction of up to one percentage point. Despite recent signals from the ECB about pausing rate cuts, Stournaras's comments reflect deep unease about the external pressures facing the eurozone economy.