The European economy could end up in stagflation if US president-elect Donald Trump follows through on his threats of trade tariffs, European Central Bank governing board member Christodoulos Patsalides has warned. "Trade tensions are rising," the Cypriot central bank governor said in Nicosia on Thursday. "If trade restrictions materialise, the result could be inflation, recession or worse, stagflation." He said that while there was room to continue reducing borrowing costs, it should be done "at a steady pace and magnitude".