Weber Sees German, Euro-Area Inflation Below 2% in Medium Term

Weber Sees German, Euro-Area Inflation Below 2% in Medium Term

Weber Sees German, Euro-Area Inflation Below 2% in Medium Term

Jan 18, 2011 12:11 pm ET

Jan. 18 (Bloomberg) -- European Central Bank Governing Council member Axel Weber said he expects inflation rates in Germany and the euro region to be below the bank’s 2 percent limit in the medium term.

“In the medium term, inflation rates below 2 percent should still be expected for the euro area as well as for Germany,” Weber, who heads Germany’s Bundesbank, said in a speech in Frankfurt today. “Inflation risks are still more or less balanced but upside risks could continue to increase. Therefore, the ECB council still considers the current interest rates appropriate. At the same time, future price developments have to and will be monitored very carefully.”

The ECB last week moved inflation fighting back into focus after consumer-price gains in the single-currency region breached the bank’s price-stability threshold for the first time in more than two years. Widening divergences between euro-region economies and a fiscal crisis that’s threatening to engulf the Iberian peninsula make it harder for the ECB to set its “one- size-fits-all” policy.

“Germany is benefitting considerably from the strong recovery of the global economy, especially in Asian emerging markets,” Weber said, adding that German exports to China have increased 80 percent from pre-crisis levels. After a temporary slowdown of momentum, “foreign demand is once again providing stronger impulses.”

While exports won’t grow at the same pace as last year, investment activity will “strongly increase” and private consumption should “rise considerably,” Weber said. Unemployment will average less than 7 percent in 2012, down from an average 7.7 percent in 2010.

The German economy, Europe’s largest, expanded 3.6 percent last year, the most since records for a reunified Germany began in 1992, and the Bundesbank forecasts growth of 2 percent this year. By contrast, the Greek, Irish and Spanish economies shrank last year, according to European Commission estimates, and Portugal’s is forecast to contract this year.

--With assistance from Jeff Black in Frankfurt. Editor: Matthew Brockett

2 comentarios

Guardiola -

Zapatero no quiere que se hable de la liquidez de la banca :

16:04 - 18-01-11
EFEDJ Min Economía España: Se podría examinar la...

liquidez de la banca

2011-01-18 08:40 DJLL002778N/DJSW N/EDJ N/BON N/CBK / R/EC R/EU R/SP / /

BRUSELAS (Dow Jones)--La ministra de Economía española,
Elena Salgado, dijo el martes que la situación de liquidez de los
bancos podría examinarse, pero no como parte de una nueva ronda de
pruebas de solvencia a las instituciones financieras.
"Quizás sería posible hablar de liquidez, pero no en las
pruebas de estrés", dijo cuando se le preguntó si los ministros
de Finanzas de la UE discutieron la posibilidad de incluir la liquidez en
futuras pruebas.
Durante su rueda de prensa tras la reunión de los ministros de
Finanzas de la UE, Salgado dijo que no se había hablado de pruebas
de liquidez.

-Por Nicholas Winning y Laurence Norman, Dow Jones Newswires, +44 207
842 9498;

(END) Dow Jones Newswires
January 18, 2011 08:40 ET (13:40 GMT)

Guardiola -