By PARIS (Reuters) – The new Trump administration’s economic policies in the U.S. may have a “relatively limited” effect on European inflation but could have a more noticeable impact on long-term interest rates, ECB policymaker Francois Villeroy de Galhau said on Tuesday.
Villeroy, who is head of the French central bank, said that President-elect Donald Trump’s plans to hike tariffs and cut taxes increased risks for the world economy, adding to U.S. inflation and weighing on growth abroad.
“The inflation effect could be relatively limited in Europe, however long-term interest rates set by the market have a certain tendency to cross the Atlantic,” Villeroy told a retail investor conference in Paris.
“I don’t think it changes much for European short-term rates, but long-term rates could see a transition effect,” he added.
