FRANKFURT (Reuters) – The tariffs promised by U.S. President-elect Donald Trump would upend worldwide commerce however could in the end have a “minor impact” on inflation, European Central Financial institution policymaker Joachim Nagel stated.
Trump made tariffs a key ingredient of his pitch to voters, in what some analysts concern might be a a lot worse rerun of the Republican former president’s 2018-2019 commerce warfare with China.
Nagel, the Bundesbank’s President, cited empirical research exhibiting that the impact of world integration on home costs is “economically small”.
“While we can be quite sure about the direction of this impact, its magnitude seems minor,” he advised a convention in Tokyo. “Accordingly, global integration would have to decrease substantially to cause a noticeable rise in inflationary pressures. And, so far, we have not seen this.”
He added that, if geoeconomic fragmentation did result in better inflationary pressures, the ECB and different central banks would may maintain it at bay through greater rates of interest.
