The head of the European Central Bank warned that global friction over trade - such as U.S. threats to impose more tariffs - is holding back the economy and underlined the bank's readiness to deploy more stimulus if needed.
Mario Draghi said Wednesday that an improving jobs market and rising wages were helping the economy in the 19 countries that use the euro but uncertainties like trade disputes and Brexit are hurting it.
"Global headwinds continue to weigh on euro area growth," he told a news conference after the central bank kept its key interest rates and policy promises on hold.
Draghi was speaking hours after U.S. President Donald Trump threatened to pile tariffs on another USD11 billion worth of goods from the European Union, ratcheting up tensions as the two sides negotiate trade terms.
"The fact that these threats are being voiced with some frequency is certainly undermining confidence," Draghi said.
The 19-country eurozone, which relies heavily on exports, has also suffered from uncertainty created by a separate U.S. dispute with China over trade. Trump has targeted countries that sell more to the U.S. than they buy, saying he is protecting American companies and jobs.
Yet the trade disputes have unsettled the global economy. The International Monetary Fund on Tuesday cut its growth outlook for this year to 3.3 per cent from 3.5 per cent and its chief economist said the global economy was at "a delicate moment."
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