ECB Tone Meter Weekly Update: Dovish Shift Driven by Tariff Threats and Chinese Rerouting Fears

23 January 2026

By Marta Vilar – MADRID (Econostream) – The ECB's tone in our ECB Tone Meter moved slightly dovishly for the Governing Council as a whole and the Executive Board alone, settling at +0.04 and +0.12 respectively, though both remain in positive – i.e. hawkish – territory.

This compared with last week’s reading of +0.09 for the Governing Council and +0.13 for the Executive Board. More dovish remarks from members across the hawk–dove spectrum explained this week’s move, which was shaped by heightened uncertainty following US President Donald Trump’s threat of new tariffs.

Biggest Movers of the Week: Lagarde, Nagel, Villeroy and Panetta

This week featured comments from four of the most influential Governing Council members, all of which were assessed as more dovish than their immediately preceding remarks.

Among them was Banca d’Italia Governor Fabio Panetta. Given his influence as the representative of one of the euro area’s largest economies and his relative silence in recent months, each of his interventions on monetary policy has a significant impact on the index. Since July 2025, Panetta has commented on monetary policy only three times, the latest occurring this week, making any new remarks particularly impactful.

Panetta was cautious in his comments and took care not to explicitly signal his current policy bias. Nevertheless, an indication of his stance emerged in his remarks on the rerouting of Chinese exports, which he said was already underway and had been accompanied by declining prices in recent months.

Banque de France Governor François Villeroy de Galhau, typically more vocal than Panetta, also spoke this week in a slightly more dovish tone than in his remarks the previous week, placing marginally greater emphasis on downside risks to inflation. Notably, when asked whether his earlier description of rate hikes in 2026 as “fanciful” would also apply to rate cuts, he declined to respond, implicitly suggesting that it would not.

Deutsche Bundesbank President Joachim Nagel, who had been silent for more than a month, returned this week with a more dovish tone. He said the recent escalation in tariffs “will have some spillovers to monetary policy,” adding that any further escalation would “certainly” weigh on GDP.

Christine Lagarde – the most influential member of the ECB Governing Council in our Tone Meter calculation – also struck a more dovish note compared with her previous statements. She suggested that the renewed tariff threat had increased uncertainty, which could undermine confidence and, in turn, economic growth.

Dominant Themes in the Week’s Communication: Renewed Tariff Risks and Chinese Rerouting

A recurring theme in this week’s remarks was the downside risk to growth arising from the renewed tariff threat by the US administration. As noted above, both Nagel and Lagarde referred to the potential impact of these developments on economic activity.

Another prominent topic was the rerouting of low-priced Chinese exports. Policymakers who spoke on the record this week broadly agreed that this process is already underway, suggesting it could exert downward pressure on inflation.