The head of the central bank of Cyprus expressed fears that a new trade war between Europe and the United States could lead to negative consequences for the European economy. In his opinion, trade restrictions can cause inflation, recession or, even worse, stagflation. Patsalidis noted that the growing trade tensions could have devastating consequences for the eurozone economy. Despite this, he believes that the ECB can continue to lower interest rates for now, using a gradual and restrained approach based on incoming data. He also stressed that although the growth of the eurozone economy remains weak, the reduction in rates should be planned and justified by specific indicators. At the same time, the head of the central bank did not rule out the risks associated with inflationary pressure, which may arise due to possible supply shocks, as well as due to a steady increase in prices for services.
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