MNI: ECB Mersch: US Measures Could Cloud EZ Growth Outlook

By Christian Vits

     FRANKFURT (MNI) - The intention of the U.S. administration to impose new

trade tariffs could tarnish the outlook for economic growth in the euro area,

European Central Bank Executive Board member Yver Mersch said Monday.

     "Overall, the risks to the growth outlook of the Eurozone is seen to be

balanced, but in the meantime, there are global factors which could cloud the

robust outlook," Mersch said in Frankfurt. "One being the announced new U.S.

trade measures," he added.

     Second, the developments on foreign exchange and other financial markets

could prove to be disadvantageous for Europe's economic expansion, Mersch

argued.

     His comments are an indication that the ECB is increasingly concerned about

a looming trade war. ECB President Mario Draghi also explicitly mentioned these

two risks last week. 

     While new trade barriers would hamper the economic expansion, a renewed

appreciation of the euro may dampen inflation.

     Mersch also said that the ECB should avoid a too early exit from the asset

purchase programme as markets could overreact. On the other hand, he warned that

the longer the program runs, the more the side effects rise.

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

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