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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: So here's the LISUS this morning, the ECB warning tarras

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Speaker 2: may be more disinflationary than inflationary for Europe. This after

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Speaker 2: President Trump said he's confident of reaching a trade deal

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Speaker 2: with the EU. Joining us around the table here in

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Speaker 2: our studio in Washington, d C. The Chief economist of

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Speaker 2: the European Central Bank, Philip Blank. Philip is good to

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Speaker 2: see you, sir, Good morning, Thanks for being able to

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Speaker 2: hear in Washington. So the Government Council meeting, I imagine,

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Speaker 2: was very different this time around than a number of

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Speaker 2: months ago when you walked into that room and presented

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Speaker 2: changes to the economy. What did you tell a team?

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Speaker 1: Sure, I mean I think it was a gear change

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Speaker 1: for several reasons. So of course, our core business has

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Speaker 1: been to try and get inflation back down from a

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Speaker 1: high number to our targets. So I think there was

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Speaker 1: a milestone in this meeting in the sense of the

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Speaker 1: most recent data had come in quite low. What we'd

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Speaker 1: been waiting for services inflation to kind of drop, and

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Speaker 1: it has been dropped. And then we had surveys showing

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Speaker 1: that basically the weight dynamic this year and in twenty

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Speaker 1: six is lower than we expected. So basically, if you like,

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Speaker 1: if you clear the table about the historic issue, are

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Speaker 1: we safely bringing inflation back to target? I think a

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Speaker 1: lot it's not entirely settled, but a lot of it

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Speaker 1: is settled. So the gear change was of course, now

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Speaker 1: we have new things to talk about, and really since

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Speaker 1: all the way back to last summer, trade policy uncertainty

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Speaker 1: has been part of what we've had to talk about.

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Speaker 1: But we still have trade policy uncertainty, but we also

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Speaker 1: have trade policy news. You know, lots has happened that

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Speaker 1: the and then the other element of what we've seen

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Speaker 1: is of course, and that happened, by the way, like

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Speaker 1: a day or two before our March meeting, was a

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Speaker 1: German break through and fiscal policy, so we already had

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Speaker 1: that if you like, in the early incarnation at the

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Speaker 1: March meeting. We know more now, but it's still, you know,

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Speaker 1: in terms of what the other European countries are going

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Speaker 1: to do, it's something that's still in discussion. So what

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Speaker 1: I would say if you put all of that together,

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Speaker 1: and I think you're probably hearing this from various colleagues

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Speaker 1: and other people this week, is if I take a

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Speaker 1: longer term perspective, and the IMF in their publications this week,

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Speaker 1: a lot of the data go out to twenty thirty.

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Speaker 1: If I take a twenty thirty perspective, you know, I

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Speaker 1: think there's a lot of grants to have a renewed

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Speaker 1: optimism that essentially, with more fiscal support, the credibility of

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Speaker 1: delivering our two percent target on a kind of long

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Speaker 1: term basis is stronger. The case for the European economy

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Speaker 1: to be more resilient, to grow from a domestic source,

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Speaker 1: not just from running a big export machine, is more credible.

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Speaker 1: But of course we have to navigate from where we

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Speaker 1: are now. Where As you said in your intro, immediately

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Speaker 1: in the short term, the way it's playing out with

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Speaker 1: euro appreciation, with a big drop in energy prices, the

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Speaker 1: disinflatory forces are there. But I would say maybe the question,

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Speaker 1: you know, I wouldn't load it all on the trade policy.

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Speaker 1: What we also see now as a portfolio shift. So

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Speaker 1: there's a clear portfolio shift going on, which is I

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Speaker 1: think the way you can reconcile euro appreciation in the

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Speaker 1: middle of this trade discussion.

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Speaker 2: As you know, Philip, that sort of begs the question

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Speaker 2: why you don't act more aggressively. Does that give you

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Speaker 2: the space to act more preemptively.

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Speaker 1: Well, I think a very important narrative we had last week,

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Speaker 1: and it was repeated threat to Manto policy statement was resilience.

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Speaker 1: What we're seeing is the European economy growing. Two years

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Speaker 1: ago it was kind of more stagnating. So we said

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Speaker 1: the European economy is going to recover. We saw, you know,

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Speaker 1: modest but still market recovery last year is around zero nine.

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Speaker 1: We have zero nine written down in March for this year,

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Speaker 1: and that's basically because with incomes going up, consumption shough

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Speaker 1: to cover with our multi policy and the general improvement

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Speaker 1: of the economy, investments should recover with more government support.

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Speaker 1: So all the domestic engines are there. So what you

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Speaker 1: have to think about is all of that, if you like,

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Speaker 1: is saying that the economies should be growing, even marking

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Speaker 1: down some trait negative and this is why we're not

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Speaker 1: in a situation where we see some dramatic change in

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Speaker 1: the external environment or in fries pressures and so on.

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Speaker 1: So steady is okay? Hold on a second, are you

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Speaker 1: saying that what we've seen with respect to US policy

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Speaker 1: and the uncertainty isn't increasing the chance of recession materially

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Speaker 1: for the euroregion. Well, I mean, I think our overriding seam,

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Speaker 1: of course is uncertainty. And let's not get ahead of

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Speaker 1: ourselves in terms of being too sure about any any

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Speaker 1: path for the ecomon But I think the message is

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Speaker 1: but it's not me dreaming it up. If you look

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Speaker 1: at the external watchers, if you look at the IMF,

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Speaker 1: it's fairly modest mark dance on the growth trade for

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Speaker 1: the European economy. The US, of course has a major

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Speaker 1: trade policy issue all with the world. We have a

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Speaker 1: trade policy issue with the US. The US is an

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Speaker 1: important trading partner, but it's not our only trading partner,

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Speaker 1: so directionally it is a markdown. There is a markdown,

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Speaker 1: but it's important to say it's a markdown from a

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Speaker 1: growth trade around zero nine to a little bit less.

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Speaker 1: Let's see in the coming weeks how much less. And

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Speaker 1: I think if you look at the surveys this week,

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Speaker 1: the surveys have elements of people being concerned, but they

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Speaker 1: also have elements Right now, we're busy. Manufacturing is a

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Speaker 1: bit busier than it was. That could be a little

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Speaker 1: bit of front running of taris for sure, but it's

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Speaker 1: also remember the recovery narrative. Europe has been stagnating. The

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Speaker 1: American economy has grown quickly, So if you like, in

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Speaker 1: terms of if there is room for the American ecomomy

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Speaker 1: to decelerate, and then trade policy is adding to that,

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Speaker 1: what I'm saying to you is essentially the baseline for

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Speaker 1: Europe was to grow a bit more quickly, and so

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Speaker 1: the resilience is there. You can take a trade hit

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Speaker 1: without going to using that word which I of that

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Speaker 1: you mentioned. You mentioned, of course that Europe has more

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Speaker 1: trading partners.

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Speaker 2: Than the United States.

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Speaker 1: How concerned are you that if the walls keep going

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Speaker 1: up in the United States, China will have to just

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Speaker 1: dump somewhere. It's going to be on the continent. So

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Speaker 1: I think directly an element with that must be you know,

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Speaker 1: must be expected. But I think you know, China fully

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Speaker 1: understands that. You know, if you listen to their policy

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Speaker 1: announcements they're going to do. Their focus is on improving

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Speaker 1: domestic demand. So in terms of the re orientation from

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Speaker 1: the US, fairmount to domestic demand some amount to around

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Speaker 1: the world. But I think also China understands it's a

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Speaker 1: large economy and a bit of restraint in exporting may

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Speaker 1: make sense.

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Speaker 2: For the twenty seconds left, I just wanted to jump in.

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Speaker 2: Olie Rain was busy this morning, your governing council partner,

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Speaker 2: and he made the point that we should be open

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Speaker 2: to larger interest rate cuts. Is that a position that

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Speaker 2: you and the team agree with?

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Speaker 1: Philosophically, we don't pre commit to any rate path, of course,

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Speaker 1: and so this is why again it's important, and I

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Speaker 1: think the Government Council, I think, tries hard to maintain

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Speaker 1: this is. You can express that in different ways, and

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Speaker 1: in particular there's no reason to say we're always going

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Speaker 1: to do the default twenty five. Philosophically I agree with that. Okay,

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Speaker 1: what I said to you earlier on is right now

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Speaker 1: the growth performance I'm sure to be marked down. It's

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Speaker 1: still a growing economy with inflation I think to the downside.

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Speaker 1: But we don't need too dramatic

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Speaker 2: About Philip Lane, the Chafe economist of the e c

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Speaker 2: B