ECB Says Trump's Tax Cuts Will Aid Euro-Area Economic Boom

Gallo Says Impact of Tax Reform Has Been Anticipated

The euro-area economy may get a boost from an unlikely ally: Donald Trump.

The currency bloc’s expansion is the strongest in a decade and could be lifted further by the U.S. tax reform, according to the account of the European Central Bank’s December policy meeting published Thursday.

The U.S. president’s tax cuts “might have a greater than expected impact on economic growth,” the account showed. “Their impact had only partially been taken into account in the December staff projections.”

Back then, the ECB forecast expansions of 2.4 percent in 2017 and 2.3 percent in 2018. The central bank has revised up its growth projections for the last five quarters.

The ECB’s assessment of the global economy was cautious, though it noted a handful of positive signs:

“The balance of risks to the global economic recovery was seen to remain tilted to the downside. However, it was also flagged that some risks identified in past discussions appeared to have diminished. For instance, the scenario of a trade war appeared less likely, the Brexit negotiations -- while still subject to risks -- had overcome an important first hurdle, and the risk of a significant negative impact of the past euro appreciation on euro area external demand had so far not materialized.”

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE