German Ministry Jumps to ECB’s Aid in Defending Inflation Spike
Germany’s economy ministry is joining a European Central Bank campaign trying to assuage concerns among the population that currently high inflation rates are here to stay.
In a series of tweets published on Monday, the ministry labeled recent price spikes in the country as mostly temporary. It said a value-added tax cut last year and new carbon-pricing measures are partly to blame, echoing explanations offered by policy makers including ECB President Christine Lagarde and Bundesbank President Jens Weidmann.
A report last Thursday showed inflation in Germany climbed to 4.1% in September, the strongest in three decades. Europe’s largest economies -- all experiencing robust growth following the end of lockdowns at the start of summer -- are seeing a similar trend.
The ECB, which is targeting inflation of 2%, has been adamant that price pressures will fade next year, and that monetary stimulus is still needed to support demand over the medium term. The Governing Council is set to fine-tune the level of support in December, when new economic projections will be available.
The central bank has been a target of frequent criticism in Germany, where fears of higher inflation are running deep. Its large-scale bond-buying programs, part of an unconventional policy that also includes negative interest rates, has been a target of several challenges in front of the constitutional court.
The ministry’s support in quelling people’s concerns comes as political parties hash out coalition arrangements following last week’s federal election. The Christian Democrats, which head the institution, are still vying to install a successor to Chancellor Angela Merkel even though they lost the vote to their junior partner, the Social Democrats.
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