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Bavaria premier demands action from ECB, German govt to dampen inflation -Breaking


© Reuters. FILE PHOTO – The former headquarters of European Central Bank Frankfurt (Germany), April 9, 2019, is where the euro sign was photographed. This picture was taken at a slow shutter speed and the camera was being moved. REUTERS/Kai Pfaffenbach/File Photo

BERLIN, (Reuters) – The Bavaria Premier called on the European Central Bank on Wednesday to tighten monetary policies to stop rising inflation in Europe’s largest economy. This was according to an interview published in Handelsblatt business magazine.

The overall inflation rate is increasing, but savers have no interest rates. Markus Soeder of the conservative Christian Social Union said that it is obvious there has been a creeping expropriation.

He said that “In an environment of rising inflation the ECB should gradually decrease its extremely loose monetary policies.”

The Harmonised Consumer Prices rose by 5.7% in Germany last month, following a record 6.0% increase in November. This is well beyond the ECB’s target price stability of 2% in the Euro Zone, preliminary data revealed last week.

Soeder stated that Olaf Scholz (Social Democrat) must lead the federal government.

Soeder said that Germany has experienced the highest price rises in the past three years. Soeder stated that government should urgently offer relief to the citizens and economy. He also suggested energy tax relief.

German officials, as well as policy makers at the central banking have indicated that they believe inflation will continue to decline in the next few months due to the temporary effect of waning interest rates.

Although central banks, including the U.S. Federal Reserve, have admitted that inflation could prove to be more persistent than previously thought; the ECB remains firm in its belief that price growth will fall below the 2% target by late 2022.

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