BEIJING, June 14 (Xinhua) -- European Central Bank (ECB) President Christine Lagarde has issued a stark warning against rising trade protectionism, saying that the recent U.S. tariff measures are creating uncertainty, undermining confidence and investment, and posing risks to global growth.
In a recent interview with Xinhua, Lagarde described the current trend toward economic fragmentation as a "lose-lose" situation, calling for adherence to multilateral rules and sustained dialogue to safeguard the interconnected global economy.
"The level of uncertainty caused by the announcements or the threats of decisions is dampening investment," she said. "It is leading all institutions to reduce their growth projections for the global economy ... It's really a lose-lose situation that we have at the moment."
She stressed that removing uncertainty and reaching agreements -- particularly on tariffs and non-tariff barriers -- would benefit all parties.
The ECB chief further warned that uncertainty itself can become a drag on economic performance -- for businesses and investors, as well as for central banks attempting to forecast and implement effective policy.
"Economic players, investors and employers have great difficulty dealing with uncertainty," she said. "The same applies to us as central banks ... if we have this great uncertainty, it makes our lives really difficult."
Noting that all countries are "intrinsically bound by supply chains," Lagarde said that economic fragmentation, whether through tariffs or strategic decoupling, poses a threat to shared prosperity.
She said that unresolved uncertainty could force businesses to reconsider their supply chains, leading to increased fragility, slower growth, and possible inflationary pressures.
"If the situation is not resolved satisfactorily and the uncertainty is not removed, the corporate world will rethink their supply chains ... and that will cause more fragility, and a period of uncertainty during which growth will probably be impaired, and we could have inflationary pressure as a result," she said.
As this year marks the 50th anniversary of China-European Union (EU) diplomatic relations, Lagarde expressed hope that both sides would remain committed to dialogue and rules-based cooperation.
"I very much hope ... that China and the EU will continue to cooperate, will continue their dialogue, will be candid with each other and will play by the rules that they both agree to," she said. "I think that determination for dialogue, cooperation and working on win-win solutions is something that will continue to be shared."
She also emphasized the importance of cooperation between the ECB and the People's Bank of China.
"We share some of the same concerns, some of the same challenges and we have a strong and deep dialogue," she said. "We are both very attached to the regulatory framework and supervision that will sustain financial stability." Enditem
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