European Central Banks warns of trade tension risks to financial stability [Video]

Rising global trade tensions present a risk to the euro area economy, the bloc’s central bank found in its biannual Financial Stability Review out on Wednesday.

The European Central Bank also said weak growth was now a bigger threat than high inflation in the 20-nation euro zone.

The latest figures recorded euro zone economic growth at a two-year high of 0.4% in the third quarter, while headline inflation hit 2% in October.

The ECB said financial markets had experienced a “resurgence of volatility” since the release of its previous report back in May, noting that further fluctuations were “more likely than usual” due to stretched valuations and risk concentration.

“Rising global trade tensions and a possible further strengthening of protectionist tendencies across the world raise concerns about the potential adverse impact on global growth, inflation and asset prices,” the Financial Stability Review said.

While Donald Trump’s victory in the U.S. presidential election is not specifically mentioned in the ECB release, countries around …