Stournaras Sounds Alarm: U.S. Tariffs May Trigger Inflation, Impact ECB Policy

European Central Bank policymaker Yannis Stournaras warns U.S. tariffs could spur a global trade war, impacting inflation and delaying ECB policy normalization. While Greece faces limited direct effects, potential declines in exports and investment due to global uncertainty could hamper its economic recovery.

Yannis Stournaras, a prominent policymaker of the European Central Bank, has issued a warning regarding the potential consequences of U.S. tariffs introduced by President Donald Trump. He highlighted the risk of rising inflation and a possible global trade war, which could stall the normalization of monetary policy in the euro zone.

Speaking at the Greek central bank's annual shareholders' meeting, Stournaras noted that heightened inflation expectations could derail monetary policy processes, worsening financial conditions and economic growth. The turbulence in global financial markets triggered by the tariffs has bolstered calls for another ECB rate cut and expedited policy easing strategies.

Despite limited direct impact from the tariffs on Greece, the country could experience reduced demand for its exports and investment due to global uncertainty. Stournaras emphasized the need for Greece to maintain a solid fiscal policy, attract investments, and continue with economic reforms to navigate these challenges and ensure recovery following its debt crisis.

(With inputs from agencies.)