BERLIN — The German government moved Friday to allay domestic fears of runaway inflation after hints by the central bank that it would soften its conservative monetary policy. Comments by Bundesbank officials earlier this week were interpreted by economists as a major shift in the central bank’s postwar stance.
This prompted mass-market daily Bild to front its Friday edition with the headline “Inflation Alarm!,” invoking Germany’s post-World War I national trauma of rampant inflation…
Bundesbank chief Jens Weidmann sought to squash what he described as an “absurd discussion,” insisting that “citizens can rely on the vigilance of the Bundesbank.”
The ECB’s mandate to keep eurozone inflation just below 2 percent “can in individual cases mean that inflation in Germany temporarily lies above the average and at the same time is under the average in other euro countries,” Weidmann was quoted as telling the daily Sueddeutsche Zeitung. — Washington Post