This week’s EU-China spat over EV and dairy duties was interpreted by the EU’s Chief diplomat as a sign that a trade war may be “unavoidable”, but we think it is actually evidence that both sides will continue to tread carefully when retaliating against protectionist measures. Next week, we expect to learn that headline inflation in the euro-zone fell very close to the ECB’s 2% target in August, but that core inflation only edged down.
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