US President Donald Trump blamed an undervalued euro for the high number of tourists visiting Europe, most of them coming from the US. While he accused European Central Bank from loose monetary policy, he also attacked the US Federal Reserve for keeping “ridiculous” high-interest rates. “The Fed Interest rate way too high added to ridiculous quantitative tightening! They don’t have a clue!” US president claimed.
The statements was followed by the rebuke against French wine trade. “France charges us a lot for the wine. And yet we charge them very little for French wine,” said Mr. Trump. The US administration is looking for a way to impose additional duties on countries that devaluate their currencies, strengthening the fears of a currency war. “Foreign nations would no longer be able to use currency policies to the disadvantage of American workers and businesses,” stated US secretary of Commerce Wilbur Ross last month. He also added that his department would tackle “currency subsidies that harm US industries”.
However, the European Central Bank implied that Trump’s administration is the precise reason to continue with loose monetary trends. The ECB may even lower the rates to restart the bank’s assets purchasing program and manage trade tensions triggered by US-China tariff war or other risks. ECB President Mario Draghi delayed an interest rate increase until at least the second half of 2020.