Published by Jessica Weisman-Pitts
Posted on November 26, 2024
1 min readLast updated: January 28, 2026
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PARIS (Reuters) – The new Trump administration’s economic policies in the U.S. may have a “relatively limited” effect on European inflation but could have a more noticeable impact on long-term interest rates, ECB policymaker Francois Villeroy de Galhau said on Tuesday.
PARIS (Reuters) – The new Trump administration’s economic policies in the U.S. may have a “relatively limited” effect on European inflation but could have a more noticeable impact on long-term interest rates, ECB policymaker Francois Villeroy de Galhau said on Tuesday.
Villeroy, who is head of the French central bank, said that President-elect Donald Trump’s plans to hike tariffs and cut taxes increased risks for the world economy, adding to U.S. inflation and weighing on growth abroad.
“The inflation effect could be relatively limited in Europe, however long-term interest rates set by the market have a certain tendency to cross the Atlantic,” Villeroy told a retail investor conference in Paris.
“I don’t think it changes much for European short-term rates, but long-term rates could see a transition effect,” he added.
(Reporting by Leigh Thomas; editing by Jason Neely)
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to influence economic activity and achieve macroeconomic goals such as controlling inflation and ensuring employment.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the amount borrowed or saved. They are influenced by central bank policies and economic conditions.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI).
The European Central Bank (ECB) is the central bank for the eurozone, responsible for monetary policy, maintaining price stability, and overseeing the financial system within its member countries.
Long-term interest rates are the rates of interest on loans or securities that have maturities longer than one year. They are influenced by expectations of future inflation and economic growth.
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