European Central Bank makes a fallacy, China is in deeper trouble

According to economics professor Sweder van Weinbergen, the European Central Bank (ECB) has been wrongly becoming more cautious in its approach to inflation. Although interest rates have been raised in Europe, they are still 2 basis points below core inflation, “while interest rates in the United States are equal to real inflation.” BNR lists the most important economic news of the week for you, so that you are fully informed.

The ECB’s accommodative policy will maintain this inflation, Van Weinbergen believes. Even though interest rates have been raised, they are still 2 basis points lower than core inflation. Whereas in the US the interest rate is equal to that of real inflation.

In this sense, the ECB is committing a “real fallacy”, says Van Weinbergen. They have the idea that inflation is something God does: ‘It just happens, just like the weather.’ There’s nothing you can do about it. They forget that they themselves are contributing to it.

China is sinking

On the other hand, according to BNR home economist Han Deyong, things are not looking good in China. The expected economic recovery after the strict coronavirus lockdown failed to materialize. Beijing is trying with all its might to give a boost to the economy, but De Jong sees it in vain. “The stimulus packages they have taken have not been very effective so far.”

There is now talk of a downturn in the eastern superpower. “This scenario was already threatening, but now it is a new blow to the economy,” says Chinese correspondent Anouk Aignram. The announcement comes on the heels of weak import and export data, a lower PMI and lackluster economic data from last month. “This is not good news.”