ECB Panetta believes there is little impact on inflation from higher US tariffs

Valentina and Andrea Mandala

Turin, Italy (Reuters) – US heights against European exports are likely to have little impact on inflation in the euro region, says top policymakers in Europe’s central banks say the main risks of medium-term inflation are It added that it remains below 2%.

In a text of a speech prepared for Italy’s annual Assiom-Forex Financial Conference, Fabio Panetta, a member of the council that manages the ECB, said that policy decisions “focus on the real economy and medium-term outlook for inflation.” “We are supported by communication that identifies the message.”

Panetta, the governor of Italy’s central bank, said the main threat to price development comes from the energy market, with prices of natural gas particularly rising amid rising volatility, ensuring close surveillance. I’ve said that.

But “Overall, the available indicators appear to suggest that inflation remains at a lower than 2% over the medium term, with key risks remaining,” he said.

Panetta said the possibility of a weakening of the euro in response to US tariffs and retaliation from Europe will be countered by slowing the global economy and by detours by China, which is hit by tariffs on European markets. I stated.

“Our estimates show that the net effect of tariffs on inflation is limited, if not slightly negative,” he said.

The full implementation of tariffs announced before the US election will shave 1.5 points from global economic growth, as subsequent retaliation measures will continue, Panetta said.

“In the Euro region, its impact is more limited – about half the percentage points – but Germany and Italy are affected by strong trade ties with the US,” he added.

(Reporting by Valentina Za and Andrea Mandala, Editing by Giselda Vagnoni and Gareth Jones)