Europe will suffer in the event of a new trade war with the United States and could face a recession combined with high inflation, Cypriot central bank governor Christodoulos Patsalides said on Thursday, Reuters reported.

Incoming U.S. President Donald Trump has promised to impose duties on most imported goods and said Europe will pay a heavy price for running huge trade surpluses for years.

“Trade tensions are rising,” Patsalidis told the conference. - If trade restrictions go into effect, the result could be inflation, recession or worse, stagflation.”

Nevertheless, for now, the European Central Bank may continue to cut interest rates, with the next move possibly coming in December, Patsalidis added.

“While growth in the eurozone economy has been weak for some time, the approach to rate cuts should be gradual and data-driven. If incoming data and new forecasts in December confirm our baseline scenario, we will have room to continue cutting rates at a sustainable pace and scale,” the Cypriot central bank governor said.