Yannis Stournaras, a policymaker at the European Central Bank (ECB) and the governor of the Bank of Greece, remarked on the potential economic ramifications of rising inflation driven by U.S. tariffs. He warned that increased inflation and a burgeoning global trade war could hinder the euro zone’s monetary policy normalization efforts. Stournaras emphasized that any resurgence in inflation or inflation expectations might not only delay the normalization process but could also adversely affect financial conditions and overall growth momentum. The uncertainty in global financial markets, spurred by the U.S. tariff imposition, has led economists to suggest the possibility of an additional ECB rate cut.
This environment of heightened volatility supports claims for swift policy easing by the euro zone’s central bank. Stournaras noted that the impact of tariffs would not be confined to the U.S. and Europe alone; countries not directly subjected to these duties would also experience the negative effects of declining global trade due to interconnected economies. He further explained that tariffs imposed on imports from one nation would inevitably impact other countries involved in global supply chains, even without retaliatory measures being implemented. While Greece’s economy is projected to grow by 2.3% this year—outpacing many of its euro zone counterparts—the direct effects of U.S. tariffs may be limited.
However, exports such as olive oil, oil, and feta cheese to the United States could see reduced demand. Additionally, the heightened global uncertainty may affect investment appetite in Greece as it continues its recovery from a significant debt crisis experienced between 2009 and 2018. Stournaras concluded that addressing these challenges requires Greece to maintain sound fiscal policies, attract investments, and implement necessary reforms.