ECB’s Panetta: Must Take Trade Tensions, Uncertainty Into Account for Policy Decisions
5 May 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Fabio Panetta said on Monday that recent trade tensions and increasing uncertainty would have an impact on monetary policy decisions
In a speech at the Asian Development Bank annual meeting in Milan, Panetta, who heads the Banca d’Italia, said that ‘[t]rade barriers and heightened uncertainty are key variables we must closely assess when formulating monetary policy in the euro area, as they affect both economic growth and the transmission of policy decisions.’
Protectionist measures would weaken global growth, according to Panetta.
Before the recent comeback of trade tensions, growth had been ‘steady’ in Asia-Pacific and ‘moderate’ in Europe, he said, while inflation had been easing in the former and was around 2% in the latter.
‘These risks are acute for Asia Pacific, but they also affect Europe, where external demand plays a crucial role in sustaining growth’, he said. ‘The prosperity of both regions is deeply intertwined with global trade flows and a predictable international environment.’
The ECB Governing Council was concerned about geopolitical tensions, he said.
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