Christine Lagarde yesterday warned of ‘exceptionally high’ uncertainty as Europe retaliated against US President Donald Trump’s tariffs.
Lagarde, the president of the European Central Bank, said it was ‘impossible’ to guarantee that policymakers would meet a 2 per cent inflation target in the short-term given global volatility.
Her comments came after Europe said it would impose tariffs on up to £22billion of American goods from next month in retaliation to Trump’s 25 per cent levy on steel and aluminium imports from the bloc.
European markets bounced back after heavy selling earlier in the week and in London the FTSE 100 index of blue-chip stocks rose 0.5 per cent, or 44.98 points, driven by financials, industrials and energy stocks.
Trading was volatile on Wall Street, although stocks were boosted after US inflation figures were lower than expected – at 2.8 per cent in February – which bolstered the case for the US Federal Reserve, the central bank, to cut interest rates.
Trump threatened to escalate the trade war by imposing further levies on the EU, saying: ‘Whatever they charge us, we’re charging them.’
‘Uncertainty’: ECB president Christine Lagarde (pictured) said it was ‘impossible’ to guarantee that policymakers would meet a 2% inflation target in the short term given the global volatility
Two of the biggest Wall Street bosses said they still backed Trump after he met them on Tuesday. Trump donor Stephen Schwarzman, chief executive of asset
manager Blackstone, said tariffs would increase US manufacturing, telling the Financial Times: ‘That tends to be a good thing for the world.’
And Goldman Sachs chief David Solomon said business leaders ‘understand what the President is trying to do with tariffs’. AJ Bell analyst Dan Coatsworth said: ‘Markets were all over the place once again as investors’ fears intensified over what Donald Trump’s aggressive tactics will do to the US economy.
‘Sentiment was fragile, yet that didn’t stop an opportunistic group of traders fishing for potential bargains in the week’s brutal sell-off.
‘Tesla bounced back while various tech stocks were winning back some fans. This includes Nvidia.’ But research director at XTB Kathleen Brooks said sentiment towards the US had been ‘drained by Trump’s scattergun approach to tariff policy, retaliatory actions by the EU and Canada and the prospect of what a global trade war will mean for the world economy and financial markets’.
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