Trade uncertainty lowers growth, inflation in near term, ECB’s Knot says

investing.com • 13/05/2025 - 14:25 PM

U.S. Trade Policies and Global Economy

AMSTERDAM (Reuters) – The U.S. administration’s trade policies are creating fundamental uncertainty in the global economy that could lower both economic growth and inflation in the near term, Dutch central bank chief Klaas Knot said on Tuesday.

Trade tensions, whether resolved or not, create an incentive for firms and households to postpone spending, reducing consumption and investment. This, Knot, the longest serving member of the European Central Bank’s Governing Council, explained, acts as a drag on overall growth, at least in the near term, he told a conference.