ECB’s Knot: Tariffs to Be Deflationary in Short-Term But Raise Prices in Longer Run

18 June 2025

ECB’s Knot: Tariffs to Be Deflationary in Short-Term But Raise Prices in Longer Run
Klaas Knot, governor of De Nederlandsche Bank, at the ECB International Women’s Day 2025 event in Frankfurt on March 7, 2025. Photo by Angela Morant/ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MILAN (Econostream) – European Central Bank Governing Council member Klaas Knot said on Wednesday that US tariffs would hurt European growth, while the effect on inflation was harder to determine.

In a panel discussion at the Young Factor International Conference in Milan, Knot, who heads De Nederlandsche Bank, said that ‘tariffs have a negative effect on the economy. On inflation, it’s more ambiguous.’

The short-term impact of tariffs on inflation would be to the downside, according to Knot, who said that in the longer term, ‘tariffs themselves tend to raise prices.’

 

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