Capital Economics: Limited Impact of Trade Agreements, ECB Expected to Stand Pat

ChainCatcher news, despite reports that the EU is about to reach a trade agreement limiting U.S. tariffs, Capital Economics economist Andrew Kenningham pointed out that the European Central Bank is likely to maintain a cautious stance.

The Wall Street Journal previously reported that Brussels plans to accept a proposal for a 15% tariff on most EU goods exported to the U.S.—though lower than the 30% threatened by Trump, it is significantly higher than the current rates faced by European goods.

Kenningham analyzed that this move would have a limited impact on the Eurozone economy. This means that European Central Bank President Christine Lagarde and her colleagues, who are holding a policy meeting in Frankfurt, are unlikely to change their policy stance as a result. "While the agreement could avoid a destructive escalation of trade barriers, the actual impact would be slightly adverse compared to the economic assumptions underlying the ECB's baseline forecasts," Kenningham stated.