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Investing.com - Aggressive U.S. tariff announcements could end up denting consumer prices rather than fueling inflationary pressures, European Central Bank Governing Council member Robert Holzmann told Bloomberg News.
Speaking to Bloomberg in Washington, where he is attending the International Monetary Fund’s spring meetings, Holzmann said that broader uncertainty around the Trump administration’s erratic tariff plans has left upcoming ECB decisions on interest rates "completely open."
Holzmann added that policymakers do not known "where we’ll end up," but noted that he agreed with ECB President Christine Lagarde’s recent assessment that the net impact of the levies seems to be deflationary rather than driving up prices.
The comments come after the ECB, which has slashed borrowing costs seven times since last June, is considering its next policy moves against a backdrop of widespread concern over the effect of Trump’s tariffs. Markets are currently pricing in two more quarter-point reductions before the end of 2025, as well as a 60% chance of a third, Bloomberg reported.
Earlier this month, Trump unveiled elevated duties on many countries, citing the need to rebalance perceived unfair trade practices, reshore manufacturing jobs, and boost government revenue. However, following deep ructions in stock and bond markets, Trump announced a 90-day delay to the tariffs, and has suggested that the White House is looking to secure dozens of trade deals with individual nations.
Economists have flagged that Trump’s tariffs stand to push up inflation and weigh on growth in the U.S., and potentially spread to other parts of the global economy. Businesses, meanwhile, have warned that uncertainty around the on-and-off levies has made it difficult to plan out future investment decisions.
Holzmann said that he anticipates this lack of clarity "created by the U.S. will persist" beyond the 90-day postponement, adding that there will be "scars in the economy" even if Trump ends up lowering the tariffs.