FRANKFURT, Germany (AP) \u2014 Europe\u2019s economy is holding up better than expected in the face of U.S. President Donald Trump\u2019s new tariffs – in part because the European Union didn\u2019t retaliate with self-defeating tariffs of its own, the head of the European Central Bank said Tuesday. <\/p>\n
Christine Lagarde said the impact of Trump\u2019s trade war<\/a> on growth and inflation in the 20 countries that use the euro currency had also been softened by a stronger euro and by conclusion of a trade deal with Trump. The deal capped tariffs at 15% and took away uncertainty that threatened to delay or disrupt business investment. <\/p>\n \u201cA year ago, most would have assumed that U.S. tariffs… would trigger a major adverse shock to the euro area economy,\u201d Large said in a speech delivered at a central banking conference in Helsinki, Finland. \u201cYet some of these assumptions have not been borne out.\u201d<\/p>\n There had been little impact on inflation, she said, and effects on growth have been \u201crelatively moderate\u201d due to European governments taking pro-growth measures in response. Lagarde said that as a result the ECB\u2019s interest rate policy was \u201cin a good place\u201d and that accordingly the bank couldn\u2019t commit to any future rate path, whether one of action or inaction.\u201d The bank\u2019s next policy meeting is slated for Oct. 30; the bank left its key rate unchanged at 2% at its last meeting Sept. 11. <\/p>\n