ECB’s Stournaras: Tariffs ‘Definitely a Deflationary Measure’ for the Eurozone

7 April 2025

ECB’s Stournaras: Tariffs ‘Definitely a Deflationary Measure’ for the Eurozone
Yannis Stournaras, governor of the Bank of Greece, at the European Central Bank Forum on Central Banking in Sintra, Portugal on June 28, 2023. Photo by Sérgio Garcia/ ECB under CC BY-NC-ND 2.0.

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Monday predicted an important blow to euro area economic growth from the new US tariffs, whose net effect he insisted would prove deflationary.

In an interview with the FT, Stournaras, who heads the Bank of Greece, warned of the sizeable ‘negative demand shock’ the tariffs would trigger in the euro area, which already faced only ‘modest’ growth prospects.

‘A notable adverse impact on growth could lead to activity being much weaker than expected, dragging inflation below our targets’, he said.

According to Stournaras, the ‘worse-than-expected’ US tariffs were ‘definitely a deflationary measure’ for Europe, with the ‘unprecedented’ level of ‘global policy uncertainty’ bound to dampen growth.

One could not ‘precisely assess the impact of tariffs’, but the hit to the euro area economy ‘could be anything between 0.5 and 1 percentage points’, he said.

Stournaras rejected comment on whether a 50bp cut were warranted, according to the newspaper.