(March 20): European Central Bank (ECB) Governing Council member Madis Muller warned that US President Donald Trump’s push to impose trade levies could stoke inflation.

“The market is expecting still the rates to go a little bit lower, but I think we have to be also careful,” he said. “When we think of in which direction for example the tariffs or counter-tariffs imposed by the EU [European Union] on American goods might have an impact on the economy, it would weaken the economy both in Europe and the US, but also it would probably drive logically prices a bit higher, so there’s a bit of upside risk for inflation.”

Muller, speaking to a conference in Tallinn on Thursday, added that “the debate about public investments, in particular for defence, it means more government spending, again likely to lead to somewhat higher inflation.”

The ECB expects inflation to reach its 2% inflation target around the end of this year. Policymakers have cut interest rates six times since June, though what they do in April is less certain.

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