European Central Banks warns of trade tension risks to euro zone financial stability

The European Central Bank’s biannual Financial Stability Review warns that rising global trade tensions pose a risk to the euro area economy, with weak growth now seen as a greater threat than high inflation. Despite a two-year high of 0.4% economic growth in the third quarter and 2% headline inflation in October, financial markets have experienced increased volatility, prompting the ECB to caution that further fluctuations are more likely due to stretched valuations and risk concentration.

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