In more than four years, the annual inflation rate of Germany has accelerated through its fastest pace, giving ammunition to hawks in the eurozone’s largest economy that are uneasy at the ECB or European Central Bank’s loose monetary policy. In accordance to this, the rise in German inflation went up to 2.2% in February, which is above the ECB’s target rate for the Eurozone to close to but under 2%.
In addition, Mr. Wiedmann, one of the most influential personalities on the European Central Bank’s governing council, said in a speech in Slovenia that: Inflation this 2017 is likely to be well in excess of the figure projected to date, and that this might also be the case for the euro area as a whole. He also suggested a strong inflation was likely to moderate towards the end of 2017.
In relevance to this, German inflation have dropped in March after overshooting the European Central Bank’s target in February, which made a change in monetary policy less likely. Rising prices are a sensitive issue in Germany, prices rose 1.6% compared with March of the previous year (2016), in which figures from federal statistics authority: Destatis showed a 0.6% decrease from February’s figure.
The latest figures are likely to ease pressure on the central bank to raise interest rates, in which German economist and politicians are urging since last February, after inflation jumped past the European Central Bank’s target. For their part, ECB policymakers argued they should continue their policies of low rates and cash injections into the economy to look through the spike in price growth.
In addition, higher inflation across the 19-nation Eurozone since December has been a temporary effect of higher energy prices this year compared with the first months of 2016, as what top central bank officials believe.