ECB's Kocher: Trade Tensions Less Damaging, Recovery Signs

On November twelfth, new insights emerged regarding the European economy and the impact of global trade tensions. Martin Kocher, a member of the European Central Banks governing council, stated that Donald Trumps trade war has been less damaging to Europe than initially feared. He noted that the anticipated strong reduction in growth rates and inflationary effects have not materialized to the extent expected earlier this year. This positive outlook comes as a closely watched business survey indicated an unexpected and significant pickup in economic activity during October. Kocher, who previously served as economy minister, suggested these are early signs of a potential economic recovery. However, he cautioned against complacency, emphasizing that the current tariff levels are the highest since the nineteen thirties, and their full effects on the global economy are yet to be seen. Meanwhile, falling inflation has allowed the European Central Bank to cut its key deposit rate eight times since the middle of last year. The rate has dropped from a record high of four percent to two percent, a level the bank now considers non-restrictive for the economy. Kocher, a behavioral economist, is a newer voice on the council, and many analysts expect a more moderate approach from him compared to his predecessor. According to officials, the difficulty lies in assessing whether the main effects of the trade conflicts have already occurred or if they will gradually impact the economy over the coming months and even years. Kocher believes more effects will emerge over time, but whether they will lead to overall inflation or disinflation in the euro area remains uncertain. He also highlighted that recent developments, such as an interim agreement between the United States and China at the APEC summit, could further alter the economic outlook. The European Central Banks governing council is set to meet again in December, when new forecasts will include estimates for growth and inflation extending to twenty twenty-eight. While policymakers unanimously agreed to keep interest rates steady last week, there are differing views on whether another rate cut might be necessary in the future.The Daily News Now! — Every city. Every story. AI-powered. Hosted on Acast. See acast.com/privacy for more information.