Europe should take Trump's partnership pledge at face value: ECB's Weidmann

November 10, 2016 1:12 PM EST

Central Bank (Bundesbank) Chief Jens Weidmann attends a press conference after the Franco-German Financial Council meeting in Berlin, Germany, September 23, 2016. REUTERS/Axel Schmidt


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FRANKFURT (Reuters) - Europe should take Donald Trump's post-election words about partnership and fairness at face value, even if recent isolationist rhetoric creates political uncertainty, Bundesbank President Jens Weidmann said.

In a speech on Thursday in Berlin Weidmann, a member of the European Central Bank's rate-setting Governing Council, also said the euro zone bank's expansionary monetary policy was still necessary as domestic price pressures remained low.

Expectations of a looser, inflation-boosting fiscal stance under Trump helped U.S. long-dated Treasury yields rise to their highest levels in more than 10 months on Thursday.

Trump's surprise U.S. presidential election win has also raised concerns that the world's biggest economy, already considered somewhat closed, will turn even more protectionist, reducing global trade and slowing growth.

But he sounded more conciliatory after his victory, saying the U.S. will deal all people and all nations fairly and in partnership.

"Let's take the newly elected president at his word," Weidmann said. "Fair partnership has always been the basis of international relations ... So it should remain."

He added: "We must face the challenge of convincing people about the advances of an open market economy and must to take their fears of the future seriously".

Partly as a backlash against globalization, the long-felt consequences of a debt crisis and a heavy inflow of refugees, populists have also been gaining strength in Europe, threatening to hijack the political agenda as key countries including France and Germany prepare for elections.

"Growth prospects are currently also impacted by pronounced political uncertainty," Weidmann said.

"Not only the sentiment and trends behind the Brexit vote but also the result of the American presidential election raises questions about how far protectionism and isolationism will determine the future political agenda."

Weidmann also said the ECB's earlier decision to have national central banks buy their own government's debt in the bank's 1.74 trillion euro asset purchase scheme should remain a binding commitment.

(Reporting by Balazs Koranyi; editing by John Stonestreet)



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