Trump's policies harm U.S. economy, French central banker says

PARIS, March 26 (Reuters) - The Trump administration is unsettling the multilateral economic system, harming the U.S. economy in the process and to a lesser extent Europe as well, the head of France's central bank said on Wednesday.

"Through his decisions and reversals, Mr. Trump destabilizes the multilateral system," Francois Villeroy de Galhau told lawmakers on the finance commission of the lower house of the French parliament.

"This turnaround increases long-term risks, whether they are financial – think of crypto-assets or non-bank intermediation – or climatic," Villeroy said.

The U.S. Federal Reserve's recent downgrade of its forecast was evidence that the Trump administration's policies were already harming the U.S. economy, he added.

While the cost in Europe would be lower, an increase of U.S. tariffs in the second quarter would have a "limited" impact on European inflation and could reduce euro zone economic output by 0.3% in a full year, Villeroy said.