Bundesbank chief warned German cabinet of economic risks: paper

BERLIN (Reuters) – The chief of Germany’s central bank, Jens Weidmann, warned the government of increasing risks of the economy cooling when he spoke at a July 6 cabinet meeting, business newspaper Handelsblatt reported, citing government sources.

The Handelsblatt report came after the central bank, the Bundesbank, last month cut its growth forecast for this year and said trade and political concerns had made the outlook for Germany’s still robust economy more uncertain.

In June, the Bundesbank forecast growth of 2.0 percent this year, far lower than the 2.5 percent it expected last December.

Weidmann told the cabinet to prepare for harder times, Handelsblatt reported attendees of the July 6 meeting as saying after the central banker joined the session as a guest.

Weidmann said the government would have to step in when the next downturn hits as it will take so long for the European Central Bank’s monetary policy to normalize that it would have little scope to act, the paper cited its sources as saying.

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