- The curtain is coming up on new world order
- The US is behaving very strangely for an ally
- European countries would be much stronger if they scrapped non-tariff trade barriers
- We can do better on growth, productivity and debt
- Eurozone inflation is under control
- Tariffs would cause a very small upward inflation effect
- The German economy would be more impacted than French economy by tariffs
- Monetary policy is in a good position
ECB’s President, Christine Lagarde, spoke at a discussion panel at the World Economic Forum in Davos. She highlighted the shift to a new unpredictable era, a “new world order”, where global cooperation, free trade, and U.S. leadership is being replaced by something more fragmented.
She also talked about the Eurozone economy and how scrapping the non-tariff trade barriers would make the European countries much stronger. A “non-tariff barrier” is a rule, regulation, or bureaucratic hoop that a company must jump through to sell its goods in another country.
Lagarde reiterated that inflation in the Eurozone is under control and that tariffs will have just a small upward inflation effect. She also added that the German economy would be more impacted by tariffs than the French economy because the German economy is much more reliant on exports.
Lastly, she described monetary policy as being in a good position, essentially reiterating their neutral stance as they “wait-and-see” how things evolve in the next months. As a reminder, the ECB brought the policy rate to 2.00% which is right in the middle of their estimated neutral rate range of 1.75%-2.25%
