News from the European Union: EU fears eurozone as ECB tackles inflation | World

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News from the European Union: EU fears eurozone as ECB tackles inflation | World


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After an 18-month review, the organization raised the target to two percent, from “below but close to two percent.” Inflation jumped to 2.3% in Germany, fueled by a reduction in restrictions on coronaviruses.

However, as a member of the eurozone, Germany is unable to solve this problem by raising interest rates.
Only the ECB, which manages the economy of the euro zone, could do it and that would risk torpedoing the economies of the most indebted members.

Florian Weber, of the Bavarian Nationalist Party, was scathing about the management of the ECB.

Speaking to the German news site Presse Portal, he said: “This is all a joke.

“This is all a joke” (Image : GETTY)

Christine Lagarde is President of the ECB (Image : GETTY)

“The ECB just claims to be the master of the procedure.
“Even though it has found itself in a bind with its zero and negative interest rate policy, the ECB’s pockets are empty.

“Now the one-year course” close your eyes and hope for the best “, with which, by the way, the ECB has always exceeded its mandate, which is designed exclusively for price stability, is taking its revenge. “

Mr Weber argued that eurozone leaders risked undermining confidence in their currency.

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“This is all a joke” (Image : GETTY)

He commented: “I don’t know if the ladies and gentlemen from Frankfurt [where the ECB is based] realize that the stability of a currency depends above all on confidence.

“And that they’re about to lose the last bit of confidence and credibility. “

The Bavarian Party wants Bavaria, the largest state in Germany, to become an independent country.

They won 1.7% of the vote in the 2017 Bavarian parliamentary elections.

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Euro zones

Angela Merkel to step down as German Chancellor later this year (Image : GETTY)

Euro zones

Between 2009 and 2012, the euro area suffered a major debt crisis (Image : GETTY)

There are fears that inflation in the eurozone will rise further due to the ECB’s quantitative easing policy.

In June, Jens Weidmann, who heads Germany’s central bank, warned: “Inflation is not dead.

Inflation, which measures the rise in prices, has a huge impact on a country’s economy.

High inflation devalues ​​a currency, making it more expensive to buy goods abroad.

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The ECB’s Governing Council has issued a statement justifying its decision to raise its interest rate target.

He said: “When the economy operates close to [zero] interest rate, it requires particularly vigorous or persistent monetary policy action to prevent negative deviations from the inflation target from perpetuating.

“It may also involve a transitional period in which inflation is slightly above target. “

Euro zones

Anti-austerity riots in Greece in 2012 (Image : GETTY)

Many eurozone economies are struggling with high public debt, made worse by the coronavirus pandemic.

During the eurozone crisis of 2009-12, a number of EU states had to be bailed out to avoid bankruptcy.

In response, they were forced to sharply cut government spending, causing unemployment to spike.

Additional reporting by Monika Pallenberg.

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