ECB Tariff Comment Recap: Policymakers Differ on Impact and Policy Response

10 April 2025

ECB Tariff Comment Recap: Policymakers Differ on Impact and Policy Response
Press room at the European Central Bank building. Photo by the ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – With the pre-meeting quiet period of the European Central Bank having started today, we have collected in one place the key comments of Governing Council members regarding the US tariffs announced on April 2.

It should be noted that Wednesday evening’s announcement to reduce almost all tariffs to 10% could naturally change opinions, barring yet another reversal by US President Donald Trump, which cannot be excluded.

All comments below predate that announcement. However, even with that announcement, uncertainty about global trade remains very elevated; tariffs of 10% are still in place on Europe; and China continues to face extreme tariffs that, among other things, could lead it to rely more on European markets, with potential implications for euro area inflation.

 

Views on April 17 decision:

  • 9 April – Executive Board member Piero Cipollone: ‘[W]e should think about the policy to make our economy more resilient and stronger.’
  • 9 April – Austrian National Bank Governor Robert Holzmann: ‘I’m always open for good arguments but for the time being, I don’t see a reason for a cut. As a strategy, waiting dominates alternatives in both directions if faced with uncertainty that will likely clear in a few months.’
  • 9 April – Banque de France Governor François Villeroy de Galhau: ‘There is still room for rate cuts, which we must decide according to an agile pragmatism: pragmatic because it is based on economic data, and agile because we have to move as fast as is justified. The changes since April 2 argue for a reduction in the near future.’
  • 9 April – Bank of Finland Governor Olli Rehn: ‘Based on the overall assessment of inflation and growth, I believe the case for further rate cuts at the April meeting has clearly strengthened.’
  • 8 April – Bank of Lithuania Governor Gediminas Šimkus: ‘This [tariffs being deflationary in the medium term] warrants a more accommodative policy stance to ensure that inflation converges to our medium-term target.’
  • 3 April – European Central Bank Vice President Luis de Guindos: ‘In terms of monetary policy, this uncertainty means we need to be extremely prudent when determining the appropriate stance.’
  • 3 April – Deutsche Bundesbank President Joachim Nagel: ‘We will have to reassess the situation in the Eurosystem.’
  • 3 April – Bank of Greece Governor Yannis Stournaras: ‘In my view recent developments do not constitute an obstacle to a further rate cut in April.’

 

Views on a 50bp step:

  • 9 April – Austrian National Bank Governor Robert Holzmann: A 50bp cut would be something ‘ludicrous’
  • 8 April – Bank of Lithuania Governor Gediminas Šimkus: ‘I see no need to talk about 50bp.’
  • 7 April – Bank of Greece Governor Yannis Stournaras: Asked in an FT interview if the situation was grave enough to require a 50bp cut, he declined to comment.

 

Views on inflationary impact:

  • 9 April – Banco de Portugal Governor Mário Centeno: The impact of US tariffs on prices would be ‘ambiguous’.
  • 9 April – Banco de España Governor José Luis Escrivá: ‘That [short-term inflationary pressures from tariffs] is not important in our decision-making process, what’s important is its implications for inflation in two years’ time, in the medium term. This is where we are seeing elements in both directions.’
  • 9 April – Banque de France Governor François Villeroy de Galhau: ‘The impact of the shock on inflation is uncertain and could be very slight, or negative.’
  • 9 April – De Nederlandsche Bank President Klaas Knot: ‘It is likely that as time progresses, the impact will become more inflationary rather than deflationary, and definitely if you then also add to the picture the change in fiscal policy in Germany and the rearm program of the EU where we will have more fiscal spending again.’
  • 9 April – Bank of Finland Governor Olli Rehn: ‘Economists are largely unanimous that large tariff increases will boost inflation in the United States, but in the Eurozone the effects on inflation can be two-way: tariff increases increase price pressures; slower growth dampens them. Overall, however, the effects on Eurozone inflation are apparently modest.’
  • 8 April – Bank of Lithuania Governor Gediminas Šimkus: ‘In the short term, the tariffs could lead to some upward price pressures in the euro area. But our more medium-term focus should remain on the underlying dynamics, not on the - hopefully -transitory supply shock. And the longer-term effects of the tariffs are weaker demand, lower growth, reduced business confidence, reduced capital spending, weaker consumer confidence - all disinflationary.’
  • 7 April – Bank of Greece Governor Yannis Stournaras: ‘A notable adverse impact on growth could lead to activity being much weaker than expected, dragging inflation below our targets … [T]ariffs are definitely a deflationary measure’ for the euro area.
  • 3 April – European Central Bank Vice President Luis de Guindos: ‘An escalation in trade tensions could see the euro depreciate and import costs rise, while much needed defence and infrastructure spending could raise inflation via aggregate demand. Geopolitical tensions could also lead to higher inflation owing to trade disruptions, rising commodity prices and energy costs. At the same time, lower demand for euro area exports and lower growth resulting from the impact of higher tariffs or geopolitical tensions could pose a threat to the economy, depress demand and push inflation down.’
  • 3 April – Deutsche Bundesbank President Joachim Nagel: ‘Global economic growth will decline. Prices will rise. Overall, the level of uncertainty among economic actors will increase.’

 

Views on economic impact:

  • 9 April – Banco de Portugal Governor Mário Centeno: US tariffs would cause a ‘contraction of the economy’.
  • 9 April – Banco de España Governor José Luis Escrivá: ‘[S]ome of the worst-case scenarios that we had identified are materialising.’
  • 9 April – Banco de España Governor José Luis Escrivá: ‘We will clearly need to revise down our projections for the Spanish economy.’
  • 9 April – Banque de France Governor François Villeroy de Galhau: ‘With a lot of uncertainty, we estimate that in 2025 the direct impact of this trade war could reduce euro area growth by around 0.25 percentage points of GDP, with a smaller effect for France. The shock is not negligible, but it would not be a recession.’
  • 8 April – Deutsche Bundesbank President Joachim Nagel: ‘Global growth prospects have deteriorated dramatically. A loss of prosperity will follow.’
  • 3 April – National Bank of Slovakia Peter Kažimír: ‘These developments are already largely included in our forecasts – among the worst-case scenarios we should prepare for.’

 

Views on market correction:

  • 9 April – Banque de France Governor François Villeroy de Galhau: ‘We are closely monitoring the markets. Even after yesterday's relative lull, the fall was particularly sharp on the equity markets, in line with the deterioration in the growth outlook. Conversely, the search for security benefits bonds. It is not the central banks that can address the economic causes of these sharp corrections, but they are mobilised collectively to ensure the proper functioning of the financial system.’
  • 9 April – Banco de España Governor José Luis Escrivá: Markets had been functioning in an ‘orderly’ manner for now, which confirmed the ‘impression that the system is far more resilient than it used to be.’
  • 8 April – European Central Bank Vice President Luis de Guindos: ‘[L]iquidity has always been there [after April 2], there was no panic situation on the markets and that’s something we look at very closely.’