European Central Bank interest rates have room for further reduction as inflation is receding, ECB Board Member Piere Siolone said, warning that the US government’s trade war with the US government with China It could have a harmful impact on the eurozone.

It is noted that the ECB has reduced interest rates five times since June, as growth concerns are beginning to override prices for prices, and investors see at least three more interest rates this year, in an effort to boost the economy trying to recover from almost two years of stagnation.

“We all agree that there is still room for interest rates reduction,” Siolone said in an interview with Reuters. “We are almost within the goal … (and) we are still on restrictive territory.”

But the highest energy prices and worldwide commercial tensions are pulling the ECB in different directions, so it makes no sense to commit to any particular move at present, including the widely expected and fully priced reduction in March, Siolone added.

However, the eurozone economy has not changed radically since December, when the ECB’s forecasts have spoken of four interest rates in 2025, including a move that already made a unanimous decision last month.

“The overall understanding of where we are going is there, the fundamental elements have not changed, so I don’t expect much change in direction”said Sipolone. “This convergence with the purpose of inflation is consistent with the course of interest rates in a downward direction.”

Inflation rose to 2.5% last month, but the ECB sees him back 2% at some point this summer, after four years over the target.

China

Great uncertainty is the commercial policy of USA And this could hit Europe hard, even before the imposition of immediate trade barriers on the block, Siolone said.

“What worries me the most is whether President Trump is involved in a complete trade war with China”added Siolone, the newest member of the ECB’s Board of Directors. “This is a more serious threat, because China has 35% of world manufacturing capacity.”

The US imposed a 10% duty on all Chinese imports this week, causing retaliation from Beijing.

Restricting access to the US would force China to find other markets and could drop discount products in Europe, limiting growth and prices, Siolone said.

Research prepared by the Institute of International Finance Peterson, a Think Tank -based Washington, concluded that while imposing duties would see the US themselves suffered in growth, they would suffer less than any of their goals.

However, Siolone appeared to downgrade the impact of potential duties to Europe. He added that businesses could absorb part of the highest cost by sacrificing the margin of profit, while the inevitable weakening of the euro over the US dollar could also shield the block.

Commercial disputes could support economic growth downward, but not so much as to cause recession, especially since other parts of the economy are durable.

Siolone noted that the labor market can withstand, consumption is likely to recover, constructions are strong, interest rate reductions have an impact on the economy and even the industry, which has been in recession over the past two years, shows signs of recovery.