Reed Cavendish Wealth Management - German Inflation Beats ECB Target

Reed Cavendish Wealth Management - Higher than expected inflation in Germany points to strong domestic consumer demand.

Analysts at Reed Cavendish Wealth Management reported that inflation in some regions of Germany exceeded the European Central Bank’s target in May, indicating strong domestic consumer demand and fueling an ongoing debate over whether or not the European Central Bank should limit its monetary stimulus.

Policymakers at the European Central Bank are calling for the bank to halt its asset purchasing scheme in 2018, and Reed Cavendish Wealth Management analysts believe there is strong justification for an interest rate increase towards the middle of next year.

Many Reed Cavendish Wealth Management investors, however, feel the chance of an interest rate increase in June next year may be threatened by market uncertainty caused by political turmoil in Italy, which is having a negative impact on economic expansion in Germany and the rest of the Euro Zone.

Official data revealed that in Germany’s most heavily populated region, yearly inflation jumped to 2.1 percent last month from 1.5 percent in April. Reed Cavendish Wealth Management analysts say the increase was largely fueled by elevated energy, transport and food prices.

In Bavaria, yearly inflation reached 2.3 percent, also exceeding the European Central Bank’s target of just less than 2 percent.

In Spain, consumer prices accelerated at their fastest pace in more than a year, also beating the European Central Bank’s target and pointing to rising inflation in the euro zone.

Reed Cavendish Wealth Management analysts expect the ECB to end its monetary stimulus this year to avoid further impact on inflation.

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Source: Reed Cavendish Wealth Management


Categories: Economy

Tags: European central bank, inflation target, Reed Cavendish Wealth Management, ReedCavendish