ECB Governing Council Member Highlights Inflation Risks

In a significant address at a conference co-organized by Bruegel and De Nederlandsche Bank in Amsterdam, Klaas Knot, a prominent member of the European Central Bank (ECB) Governing Council and President of De Nederlandsche Bank (DNB), raised alarms about the long-term effects of the ongoing global trade war. Describing it as a "negative supply shock," Knot emphasized the potential inflationary impact of the tariffs imposed by the United States administration.

Call for Vigilance and Strengthening the EU Market

"The risk is that we move to a supply/demand situation like in 2022, which means we have to be vigilant about inflation," Knot warned. He urged the European Union to bolster its internal market to mitigate these risks. His remarks underscore the delicate balance central banks must maintain in the face of evolving global trade dynamics.

ECB's Upcoming Meeting: No New Projections Expected

Adding to the discourse, Knot revealed that the ECB would not present new inflation and growth projections at its forthcoming meeting next week. This statement sets the stage for a cautious approach by the ECB amidst uncertain economic indicators.