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ECB policy setters warned of uncertain economic outlook due to China
[FRANKFURT] European Central Bank policymakers were warned in September of risks to the euro zone economy from a slowdown in emerging markets led by China, seen until recently as the world's main economic engine.
The concerns were expressed at the ECB's Sept. 2-3 policy meeting, minutes of which were published on Thursday, days after the International Monetary Fund cut its global growth forecasts, pointing partly to China.
ECB chief economist Peter Praet told the meeting in Frankfurt that "challenges facing emerging market economies were clouding the global outlook and were unlikely to recede quickly," the minutes said. "Although it was still premature to conclude whether these developments could have a lasting impact on euro area output and ... inflation, downside risks had intensified." That may indicate that the ECB will not rush into further money-printing stimulus.
Speaking at a conference on Thursday, Mr Praet struck a similar tone, cautioning that "the economic environment is characterised by seeping pessimism about the prospects for long-term growth".
The Bank of England, which also published the minutes of its latest rate-setting meeting on Thursday, was more upbeat.
Although policymakers conceded that problems in emerging markets could worsen, they said China appeared to be on a largely steady course. However, Britain does less trade with China than Germany, the euro zone's biggest economy.