ECB’s Makhlouf: Uncertainty is weighing on investment

• Uncertainty is weighing on investment.
• Soft data pointing to a significant cooling in business and consumer sentiment.
• Global economic integretion is now stalled, if not reversing; last few weeks have seen an acceleration in pace and scale of change.
• Even if a full-blown trade war turns out to be short-lived, uncertainty effects will persist for some time.
• Monetary policy must adapt to the new nature of supply shocks generated by geoeconomic fragmentation.
• Given effects of size, scale and more persistent nature of fragmentation-induced shocks, and their impact on prices, monetary policy responses will need careful calibration.
• Threats of inflation de-anchoring, from both above and below, warrant forceful and persistent responses.

He’s suggesting a more careful approach to interest rates adjustments.

This article was written by Giuseppe Dellamotta at www.forexlive.com.