The euro experienced a decline after Christine Lagarde, President of the European Central Bank (ECB), cautioned about potential weaker growth and played down the possibility of increased inflation, should President Trump’s proposed tariffs against the EU be met with a counter response.
Lagarde addressed European lawmakers on Thursday, outlining a scenario where economic growth could fall by half a percentage point in the initial year, if the tariffs were imposed and retaliated against. She also indicated that inflation could rise by the same margin in response to these events.
Despite this, Lagarde suggested that the effect on inflation would be temporary and indicated that the ECB would not counteract this with increased rates.
Following Lagarde’s address, the euro dipped to $1.0850, a decrease from its previous value of $1.0878 before her speech.
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