The guests and assistance are mixed and walk through the atrium during the IMF spring meetings of the IMF group/World Bank at the IMF headquarters in Washington, DC, on April 24, 2025.
Jim Watson | AFP | Getty images
After years dominated by the pandemic, supply chains, energy and inflation, there was a new topic that exceeded the agenda at the World Bank and the spring meetings of the International Monetary Fund this year: tariffs.
The IMF established the tone starting the week with the launch of its latest economic forecasts, which reduce growth prospects for the United States, the United Kingdom and many Asian countries. While economists, central bankers and politicians have been involved in panels and conversations behind the scene, many try to determine whether commercial tensions between China and the United States are, or perhaps not, they are not.
The policy formulators of the European Central Bank with which CNBC spoke this week widely caught a moquinery tone, indicating that interest rates continued to fall and few risks upward for inflation in the euro zone. However, all emphasized the high current levels of uncertainty, the need to maintain monitoring data and high risks for growth prospects: feelings also echoed the governor of the Bank of England, Andrew Bailey, in his interview with CNBC on Thursday.
These were some of the main messages of the ECB this week.
Christine Lagarde, president of the European Central Bank
About inflation and monetary policy:
“We headed towards our [inflation] Objective in the course of 2025, so the deflationary process is both on the way we are about to end. But we have the clashes, you know, and the clashes will be cushioned in GDP. It is a negative shock to demand. “
“The net impact on inflation will depend on which countermeasures are eventually taken by Europe. Then we have to take into account the [German] Fiscal impulse for defense investments, for the Infrastructure Fund. “
“We have seen successive movements, you know, announce [of U.S. tariffs]And then a pause, and then some exemptions. Therefore, we have to be very attentive … or cut, or stop, but we depend on the end of the end. “
In market movements:
“When we did our projections, we anticipate that … the dollar would appreciate, the euro would depreciate. It is not what we saw. And there have been some counter-intuitive movements in several categories.”
“Obviously, the German market has been positively surprised by the program that will soon be established by the German government, with a commitment to the defense, with a commitment to a great fund for infrastructure development.”
Klaas Knot, president of the Netherlands
About tariff uncertainty:
“If I look back in the last 14 years, in the initial days of pandemic I think it was an uncertainty comparable to what we have now.”
“In the short term, it is clear that the uncertainty created by the unpredictability of the tariff actions of the United States government works as a strong negative factor for growth. Basically, uncertainty is like a tax without income.”
In the impact of inflation:
“In the short term, we will have a lower growth. We will probably also have lower inflation. As we see, the euro appreciates since energy prices have also dropped. Therefore, along with the type of uncertainty of a short -term negative factor, it is clear that it will accelerate disinflation.”
“But in the medium term, the inflation perspective is not so clear. I think there are still these negative factors. But in the medium term, it could obtain retaliation. You can obtain the interruption of global value chains, which could also be inflationary in other parts of the world that only the US.
In a June rates cut and market prices for two more BCB rates cuts in 2025:
“I am completely open. I think it is too early to take a position in June, if it would be another cut. It will depend completely on these projections.”
“It would have to see a more structured analysis of the impact on the inflation profile ahead of us, and only then can I say if the market has pricing or if I do not.”
Robert Holzmann, governor of the National Bank of Austria
About the need to expect more data and news about rates:
“We have not seen this uncertainty now for years … unless uncertainty decreases, according to the right decisions, we will have to stop a series of our decisions and, therefore, we still do not know in which direction monetary policy should move.”
“Before looking at the data in detail, the question is, what kind of political decisions will be made? Will we have some increases in rates?
In the April rate of the ECB:
“I think there is a broad consensus [on rates]. But, of course, on the margin, people differ. “
“My evaluation is that at this time, it was not yet clear to what extent [tariff] They were taking countermeasures. Because with countermeasures in Europe, prices may have increased. Without countermeasures, prices pressure is very likely. And for the moment, we still do not know the address. “
On the direction of interest rates:
“I think that recent noises on an agreement [on trade] They should be true, in this case, it is very likely more towards the disadvantage than the advantage with respect to prices. But this can be changed with different decisions and whose result can even imagine in [the] Another address. At the moment, no, it will be down. “
“There may be more cuts this year, but the number is still outstanding.”
Mārtiņš Kazāks, Bank of Latvia Governor
In the opportunity of rates:
“With all this uncertainty and vulnerability, this is also the moment of opportunities for Europe.”
“It is a time for Europe to understand all the aspects of being an economic superpower and become a really complete political and geopolitical superpower, and this requires making all the decisions that were not carried out completely in the past.”
“This requires political will, political gills to make those decisions and strengthen the European economy and affirm its place in a global world.”
In the reaction of the market to tariffs:
“Until now it seems to be relatively ordered … but if one looks at the indirect effects of Europe, financial markets are working more or less well, we have not seen differentials exploiting or anything like that.”
“But in terms, however, of the macro scenarios, this uncertainty is extremely high in the sense that, given the possible results, the multiple scenarios and their probabilities are very similar to the baseline [tariff] script.”
