12.04.201821:46:00UTC+00 ECB Policymakers Worried About Euro Strength, Trade War Risks: Minutes

European Central Bank policy makers voiced concern over the threat of an all-out trade war with the United States and worried over the potentially negative repercussions stemming from the euro's strength in their policy meeting last month, minutes showed.

With the euro area economy expanding for five consecutive months, ECB officials are now debating how to withdraw the support of easy money from the bloc's economy and prepare investors for normalizing policy 10 years after the global financial crisis send central banks to enter a crisis mode.

So far, the ECB has moved slowly to reduce support. In March, it omitted a largely outdated pledge to raise asset buys if necessary from its language, a symbolic move that kept it on track to conclude its 2.55 trillion asset purchase program by the end of this year.

The euro's strengthening in recent months, which was partially due to concerns over U.S. protectionism, has not significantly affected demand, but policymakers warned that the exchange rate was a “significant source” of uncertainty with some estimating a more negative impact on inflation.

The record of the meeting showed policymakers noted that the recent movements in the euro exchange rate seemed to be more associated to relative monetary policy shocks, including communications and less to enhancements in the macroeconomic outlook.

The minutes mentioned the concerns among policymakers about the risk of trade conflicts, which is seen to have an adverse effect on activity for all nations involved, had risen. Policymakers also cautioned that the negative confidence effects could emerge.