RSS ECB's Wunsch: Impact of tariffs depends on reaction in the exchange rate

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 RSS ECB's Wunsch: Impact of tariffs depends on reaction in the exchange rate

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  • A larger euro depreciation would cushion the impact of tariffs on growth
  • But it would make a larger impact on inflation
  • If euro touches parity against the dollar, we wouldn't lose as much in terms of competitiveness
  • I guess we'll land with rates somewhere around 2%
  • Four more rate cuts is a meaningful scenario that I feel relatively comfortable with

Wunsch is being rather bold in his remarks here as he floats the thought of EUR/USD reaching parity. Then again, it's not an otherworldly take as many analysts are also seeing that happen next year. Here's some on that list:

This article was written by Justin Low at www.forexlive.com.
 
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