MNI BRIEF: EZ Inflation Uncertainties from Tariffs -Lagarde

MNI (LONDON) - The impact of potential U.S. tariffs on European goods “is uncertain at this point” due to opposing forces of GDP decline and exchange rate weakness, European Central Bank Christine Lagarde said in an interview with the FT published Thursday, adding that president-elected Donald Trump's first announcements signal a negotiation with Europe.

"Going forward, the scope of the tariffs will be really interesting to appreciate,” she said, noting that different levels of tariff would have differing impacts -- although she thought they could be very modestly net inflationary.  

Lagarde also said that Europe is not necessarily more vulnerable to a trade war due to the extent of its internal trade. Brussels could als signal that it would be prepared to buy more American goods like LNG or defence goods, she said as part of a negotiation with Washington.

Uncertainty and lower confidence in the economy will be factored into the December projections, Lagarde said, adding that consumer and business confidence surveys already show a decrease that weighs on consumption and investments decisions. (see MNI SOURCES: ECB Heads For 25BP Cut; Risks From Trump, Germany )