ECB Official Highlights Lasting Impact of Uncertainty

European Central Bank (ECB) Governing Council member Gabriel Makhlouf has issued a stark warning about the enduring effects of uncertainty on the Eurozone economy. Speaking on Monday, Makhlouf emphasized that even a short-lived trade war between the United States and the European Union would leave a lasting mark, disrupting investment and dampening consumer and business sentiment.

Monetary Policy Faces Delicate Balance

Makhlouf pointed out the challenges facing the ECB's monetary policy in the wake of geoeconomic fragmentation. The need for "careful calibration" is paramount to navigate the shocks caused by such fragmentation. He underscored the importance of a "forceful and persistent" response to prevent the deanchoring of inflation expectations, which could threaten economic stability from multiple directions.