EU Central Bankers Don’t Like What They’re Hearing From Trump

2017-02-24

Two top European central bankers had harsh words about the economic policy coming from the U.S. in remarks Thursday.

The establishment of protectionist policies in the U.S. risks undermining a key element to wealth, the head of Germany’s central bank said.

The blunt language reflects the concern felt across the globe from policy makers as they try to make sense of President Donald Trump’s unconventional economic policy and political style.

“The United States erecting trade barriers leading to other countries becoming more protectionist would, I firmly believe, potentially call into question one of the key pillars of our prosperity,” said Jens Weidmann in the opening of the central bank’s annual report.

The new president’s administration has angered many in Germany by accusing Europe’s largest economy of unfairly benefiting from an undervalued euro.

Speaking in London Thursday, the ECB’s chief economist, Peter Praet, also expressed concern about the new U.S. administration. He said some of the noises coming from Mr. Trump’s administration on international cooperation were “worrisome.” Some of Mr. Trump’s complaints about international trade and multilateral institutions reflected “simplistic narratives,” he said, though he added that economic imbalances between countries and regions are real enough.

For now, European policy makers are in wait-and-see mode.

“We still have to see how this new administration is going to behave, or act,” he said.

Mr. Weidmann said the advantages of globalization are “drifting ever further out of focus,” saying this could be true because they aren’t felt so immediately and are harder to grasp than the disadvantages.

“This debate fails to fully consider, however, is that it is international trade and interaction that underpins our prosperity,” he said. “Trade promotes the spread of fresh, productive ideas and new, improved products. It is therefore trade which stimulates productivity, which in turn is what drives wages higher.”

Source: Dow Jones

Source from : World Economy News

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