She noted Thursday that the imposition of tariffs on European imports by Washington and any retaliation adopted by the European Union (EU) could cut growth by five-tenths of a percentage point and also raise inflation by half a percentage point.

ECB estimates suggest that a 25 percent US tariff on European imports would reduce euro area growth by around 0.3 percentage points in the first year.

Furthermore, if the EU responds by increasing its tariffs on US imports, this impact would increase to approximately half a percentage point.

In an appearance before the European Parliament’s Economic Affairs Committee, Lagarde explained that they believe the bulk of the impact on economic growth would be concentrated in the first year after the tariff increase and then diminish, leaving a persistent negative effect on output.

The ECB implemented its sixth rate cut since last June earlier this month, bringing the benchmark rate to 2.5 percent, and Lagarde then suggested that a pause in the rate cuts could occur at its April meeting.

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