Olli Rehn, governor of the Bank of Finland and a member of the European Central Bank's governing council, warns that trade uncertainty is affecting the European economy in the short term, while defense investments will have medium-term effects.

<p>Olli Rehn, governor of the Bank of Finland and a member of the European Central Bank's Governing Council, points out that trade uncertainty has an immediate impact on the European economy and higher tariffs will slow economic growth. Although defense spending will boost GDP, the medium-term effects will occur because of delays in implementation. If inflation continues to fall, the European Central Bank could cut interest rates further.