EU not seeking ‘systematic confrontation’ as rival China grows
Al JazeeraDec 01, 2022
The Facts
Eurozone annual inflation within the 20-nation single currency bloc has fallen more than expected by economists in the year to May, reaching its lowest level since February 2022.
The Eurozone's Harmonized Index of Consumer Price inflation eased to 6.1%, beating estimates of 6.3% and down from 7% in April.
The Spin
Narrative A
With better-than-expected results, the steep fall in inflation will be a big boost for the European Central Bank. A recession has not materialized, but expect more rate hikes and a tight labor market as Europe tries to get inflation to where it should be.
Narrative B
While there is an evident divergence in the success of reducing inflation between the Eurozone and the UK — and the ECB now holds more options than expected when it comes to interest rates — European financial stability is still weak. The situation is still extremely fragile and sensitive to surprises, and too much confidence may lead to a macroeconomic correction in the financial markets soon.