FRANKFURT (Reuters) – Two senior European Central Bank (ECB) officials said on Monday they were more concerned about the impact of new U.S. tariffs on economic growth in the euro zone than about their effect on inflation.

Investors and policymakers around the world are awaiting details of the new trade policy from President-elect Donald Trump, who made protectionism a key plank of his election campaign.

ECB Vice-President Luis de Guindos and Bundesbank President Joachim Nagel on Monday highlighted the impact that possible new trade restrictions would have on euro zone output, while expressing greater optimism about the inflation outlook.

“The balance of macro-risks has shifted from concerns linked to high inflation to those linked to economic growth,” Luis de Guindos declared at an event in Frankfurt.

“Growth prospects are clouded by uncertainty over economic policies and the geopolitical landscape, both in the euro area and globally. Trade tensions could further increase, increasing the risk of unexpected events materializing “, he added, according to reported comments.

Analysts fear that the Republican’s second term will lead to a repeat, and worse, of the trade war with China between 2018 and 2019, with repercussions for Europe and possible retaliations.

Joachim Nagel said the tariffs promised by Donald Trump would disrupt international trade, but that he was “not too” worried about their impact on inflation.

“Global integration would have to decline significantly to cause a notable rise in inflationary pressures,” he said. “And, so far, we haven’t seen that.”

He added that if geoeconomic fragmentation led to an increase in inflationary pressures, the ECB and other central banks would keep them at bay by raising interest rates.

The ECB has cut interest rates three times since June, as inflation in the euro zone approaches the 2% target. The Frankfurt-based institution, however, revised its growth forecasts downwards twice.

Claudia Buch, chair of the ECB’s Single Supervisory Board, spoke later in the day, saying protectionism could disrupt Europe’s growth potential.

“Protectionist trends could disrupt global supply chains that are essential to European industries, which would have a negative impact on the growth potential, competitiveness and financial resilience of companies,” she told the committee. of Economic and Monetary Affairs of the European Parliament.

(Reporting Francesco Canepa and Tom Sims; Diana Mandiá, edited by Sophie Louet)

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