MNI BRIEF: Tariffs Could Bring Structural Inflation-de Guindos

MNI (LONDON) - The initial impact from any tariffs introduced by US President-elect Donald Trump would likely hit growth, but they could also indirectly lead to more persistent inflation depending on monetary and fiscal policy responses, European Central Bank Vice-President Luis de Guindos said in an interview with Helsingin Sanomat on Tuesday.

“Afterwards, if this initial impact on inflation were accommodated by fiscal and monetary policy, it could become much more structural,” he said, adding that growth would bear the brunt of the immediate effects.

The ECB will assess not only the tariffs but also US fiscal policy to gauge potential impacts on Europe, De Guindos said. Trump’s tax cuts and spending plans “could cause fiscal sustainability issues” and lead to concerns in financial markets, potentially reigniting bond vigilante activity. (see MNI SOURCES: ECB Heads For 25BP Cut; Risks From Trump, Germany )

To register to hear ECB chief economist Philip Lane's views on tariffs and the eurozone economy at an MNI Webcast event on Dec 18, click here