One of the European Central Bank’s top officials, Francois Villeroy de Galhau, reportedly urged a de-escalation in ongoing trade tensions to avoid a spiral of elevated tariffs.
According to a Bloomberg report, Villeroy, the chief of France’s central bank, said Trump’s trade policies dampened economic growth, including for the U.S., and threatened to undermine financial stability.
“It’s more crucial than ever, across the Atlantic, to tell the truth, to fully assess the damage of a trade war, and to open the way for a possible positive dialogue,” Villeroy reportedly said.
In his speech, he also mentioned that international trade is not a “zero-sum game,” where one country’s gain means another country’s loss.
Villeroy alleged Trump had pushed countries worldwide to a “lose-lose game” based on flawed economic arguments.
Villeroy’s criticism of the tariff policies comes as economists have expressed concerns over global economic growth this year. On Tuesday, the IMF reduced its forecast for global growth to 2.8% from 3.3% it had projected earlier, citing policy uncertainty.
The banker also said that the ECB’s base case is for inflation to return to 2% in 2025 without a recession. He hoped trade talks with the Donald Trump administration could produce positive results.
Villeroy also argued for preserving the International Monetary Fund and the World Bank with a more focused approach.
“Let us preserve the multilateral institutions such as the IMF and World Bank, born and hosted in this great country, with more focused ambitions,” Villeroy said in a speech at the Foreign Policy Association in New York City, according to a Reuters report.
Trump has ordered a review of U.S. memberships in both financial institutions.
Villeroy, a member of the ECB’s governing council, also said any attacks on the independence of central banks would have extremely adverse financial effects amid Trump’s attacks on Federal Reserve Chair Jerome Powell.
The Invesco
QQQ Trust
(QQQ), which tracks the Nasdaq 100, was up 2.1% in after-hours trading, while the SPDR
S&P 500 ETF
Trust (SPY) rose 1.7%, continuing gains from the regular session after Trump said he does not intend to fire Powell.
For updates and corrections, email newsroom[at][dot]com.
