European Central Bank head says trade bans deter prosperity
Date
10/24/2024 5:47:27 AM
(MENAFN) European Central bank (ECB) President Christine Lagarde addressed the impact of trade barriers and restrictions on global prosperity during an event hosted by the Atlantic Council in Washington, D.C., on Wednesday. She emphasized that the historical periods of strong U.S. leadership and economic prosperity have often coincided with increased global trade and international engagement. Lagarde stated, "The times when the United States has been in strong leadership, and when the Economy has been prosperous, have most often coincided with periods of trade around the world." This observation underscores her belief in the essential role that trade plays in fostering economic growth.
Lagarde acknowledged that while trade dynamics are evolving, they are not diminishing. "So, we are not in a world where trade stops and trade declines. We are in a world where trade continues," she remarked, noting that it continues "in a different way." She highlighted the importance of being mindful of the composition and distribution of trade, advocating for a diversified trading approach that involves different partners and mitigates risk. This perspective reflects her understanding of the complexities of modern global trade relations and the necessity for adaptation in response to changing circumstances.
Addressing specific concerns, Lagarde pointed out the "clearly" existing overcapacity in certain sectors in China, reinforcing the idea that trade rules established by the World Trade Organization (WTO) are critical for member nations. She cautioned against the assumption that simply raising tariffs would improve domestic economic conditions, stating that such conclusions are "a bit of a far-fetched conclusion." Drawing on historical precedents, she argued that periods marked by trade restrictions and barriers have not typically led to prosperity or strong global leadership, suggesting a need for careful consideration of trade policies.
In discussing the ECB's approach to monetary policy, Lagarde explained that the central bank is focused on dissecting inflation to better understand its underlying causes. She made a distinction between the ECB and the U.S. Federal Reserve, noting that the Fed operates under a dual mandate that encompasses both price stability and economic growth, whereas the ECB’s primary mandate is solely price stability. Nonetheless, she acknowledged that the ECB remains vigilant about economic growth, recognizing its influence on inflation rates. This nuanced view reflects the ECB's commitment to navigating the complexities of economic management in a challenging environment.
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