ECB ‘ready’ to intervene if tariff war threatens financial stability

The European Central Bank is ready to act should US President Donald Trump's tariff blitz threaten financial stability, ECB chief Christine Lagarde said on Friday.

- 

The ECB “is always ready to use the instruments that it has available”, Lagarde said in Warsaw, after talks with eurozone finance ministers about how Europe can avert a trade war - or protect its economy if negotiations to avoid US levies fail.

“What we have observed recently, of course, is a degree of volatility,” she told reporters.

“But in Europe, and in the euro area in particular, we have observed that market infrastructures and functioning of markets, including the bond markets, is functioning in an orderly fashion,” Lagarde said.

Her comments come less than a week before the ECB’s next meeting to decide on monetary policy, with European stock markets struggling for direction in early afternoon deals, and the dollar dropping to the lowest level against the euro in more than three years.

Although Trump announced a 90-day pause of his stinging universal tariffs, a trade war between China and the United States has continued to escalate with tit-for-tat levies.

With no end in sight, their fight has caused jitters in markets, especially Asia.

Lagarde was joined by top EU officials including economy commissioner Valdis Dombrovskis, who warned that US tariffs would hit the European Union's economic growth.