Class Nott, a member of the European Central Bank's board, warned that imposing a 25% tariff on imports by the United States would lead to a decline in the GDP of the Eurozone by about 0.3%. He indicated that these losses could worsen if the European Union retaliates with similar measures, increasing the likelihood of continued economic slowdown.
Class Nott added that these protectionist policies could lead to a steady decline in output, with the possibility that inflation may decrease more rapidly in the near term than was anticipated in the March forecasts, due to falling energy prices and increased uncertainty.
In contrast, the ECB member spoke about global supply chains facing upward pressure on prices in the medium term, which could later reflect on inflation rates. Nonetheless, he confirmed that the dynamics of core inflation seem stable at present.
Nott concluded his statements by emphasizing that he preferred to keep interest rates stable in March, before recent developments in U.S. trade policy prompted the bank to reconsider its future monetary policy directions.
