PARIS: French and German central bankers warned on Tuesday against overreacting to the signs of economic weakness coming from China that have helped trigger a bout of financial market volatility.
Speaking at a meeting of French and German central bank governors and finance ministers in Paris, Bundesbank Governor Jens Weidmann warned against painting everything black and said he did not expect a sharp deterioration in the Chinese economy.
“I agree with Jens Weidmann that financial volatility is somewhat excessive. I think we need to look through the short-term (market) swings,” Bank of France Governor Francois Villeroy de Galhau told reporters.
Weidmann acknowledged, however, that the economic outlook had grown cloudier in recent weeks, fuelled by uncertainty over China and weakness in oil and other commodity prices.
With clouds forming on the horizon for the economy, Weidmann said the outlook for inflation would be a subject of discussion at the European Central Bank’s March governing council meeting.
“Inflation forecasts for this year will need to be substantially reduced,” Weidmann said.
Published in Dawn, February 10th, 2016
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