ECB’s Schnabel: Trade Tensions Would Impact Positively on Inflation

2 April 2025

ECB’s Schnabel: Trade Tensions Would Impact Positively on Inflation
Isabel Schnabel, Executive Board member of the European Central Bank, at the International Holocaust Remembrance Day at the ECB in Frankfurt on January 27, 2025. Photo by Adrian Petty/ECB under CC BY-NC-ND 2.0.

By Marta Vilar – PARIS (Econostream) – European Central Bank Executive Board member Isabel Schnabel said on Wednesday that trade tensions would impact negatively on growth and positively on inflation.

In a speech at the Sciences Po University in Paris, Schnabel said that ‘qualitatively the new fragmented world would have a negative impact on economic growth and a positive impact on inflation simply due to the fact that supply chains become less efficient.’

The ECB was ‘well on track’ towards the inflation target and the situation could be regarded as a ‘soft landing’, she said.

There was ‘exceptional uncertainty’ in the current environment and US President Donald Trump’s 'Liberation Day' posed new threats, according to Schnabel.

Rising European bond yields due to expectations of higher defence spending suggested that ‘markets do believe in this positive growth narrative', she said.

Spreads remained stable, which, according to Schnabel, indicated an absence of significant concerns with regard to debt sustainability.

 

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