ECB official: US tariffs may trigger anti-inflation effect in the eurozone, US dominance may shift to a multipolar system

Odaily Planet Daily News - European Central Bank Executive Board member Cipollone said that US trade measures may drag down eurozone inflation in the short term because they will drag down global economic expansion. "The medium- and short-term impact may lead to a decline in eurozone inflation because real interest rates in the eurozone have risen and the euro has appreciated after the US announced tariffs," Cipollone said on Tuesday. "Trade measures may cause the same inefficiencies as in the 20th century by shifting resources from high-productivity sectors to low-productivity sectors. This contractionary effect may lead to a continued decline in global growth rates." The strengthening of the euro may be the biggest surprise for policymakers since Trump announced the tariffs. They had expected the euro to depreciate, thereby increasing import costs, and EU countermeasures may push up inflation. "The eurozone has benefited from safe-haven inflows, and the appreciation of the euro has coincided with a decline in nominal bond yields," Cipollone said. He also raised the possibility that trade differentiation may lead to "a gradual transition from a US-dominated global system to a more multipolar system, where multiple currencies compete for reserve status." (Jinshi)