Today we discuss EU-China economic relations, a critical topic. China is the EU's second-largest trading partner, and the EU is China's largest trading partner, highlighting the high degree of economic interdependence. However, this relationship poses significant challenges such us trade imbalances (to the detriment of the EU), emerging technological gaps, state subsidies and claims of unfair competition.
Given the importance of the evolution of prices to the outlook for monetary policy and hence, the overall macro picture, in today's newsletter we focus on the recent performance of one of the EU countries where disinflation is most visible, namely Spain.
The recent relaxation in energy prices and improved outlook for food prices holds the promise of a deflationary process in Spain. That said, given the inherent volatility of these markets, coupled with still persistent core inflation dynamics, we are unlikely to see a rapid
convergence to price stability targets and thus do not expect a return of expansionary monetary policy any time soon.