ECB sees trade wars as a risk to Europe's economy

Thursday, 12 April 2018 19:09 WIB

Bank Sentral Eropa ECBEuropean Central Bank


European Central Bank officials warned at their March policy meeting that trade wars and a strengthening euro risked undermining the eurozone's economic recovery, underlining the ECB's caution as it prepares to phase out its large monetary stimulus.

The minutes of the ECB's March 7 and 8 policy meeting, published on Thursday, suggest the world's number two central bank will move only gradually to phase out its 30 billion-euro ($37.1 billion) a month bond-buying program and start raising interest rates.

ECB officials said there were several risks to the global economy that could hurt the export-focused currency bloc, including increased trade protectionism and the U.K.'s withdrawal from the European Union.

The officials also worried about increased volatility in financial markets and the recent appreciation of the euro. One official said the euro's recent strength related more to central-bank policy and communication than to improvements in the eurozone's economy, a sign that the development might weigh on already-weak eurozone inflation.

The damage from any trade wars will depend on the scale of tariffs and retaliatory measures, but it might also harm the economy by denting investors' confidence, the minutes said.

Source: Marketwatch




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