ECB official: US tariffs may trigger anti-inflation effect in the eurozone, US dominance may shift to a multipolar system

According to Mars Finance, European Central Bank Executive Board Member Cipollone stated that U.S. trade measures might dampen Eurozone inflation in the short term, as they could impede global economic expansion. Cipollone said on Tuesday: "The medium to short-term impact might lead to a decline in Eurozone inflation, as the real interest rates have risen and the euro has appreciated following the U.S. announcement of tariffs." "Trade measures might cause inefficiencies similar to those of the 20th century by shifting resources from high-productivity to low-productivity sectors, and this contraction effect could lead to a continued decline in global growth rates." Since Trump announced tariffs, the euro's strength has been the biggest surprise for policymakers. They originally expected the euro to depreciate, which would increase import costs, potentially compounding inflation with EU countermeasures. Cipollone said: "The Eurozone benefits from safe-haven capital inflows, with euro appreciation coinciding with a decline in nominal bond yields." He also raised the possibility that trade fragmentation might gradually lead to a transition "from a U.S.-dominated global system to a more multipolar system, where multiple currencies compete for reserve status". (Jinshi)