A European need

Article Abstract:

There is a need in Europe for Germany to increase interest rates, since rates in Italy and Spain are above those of Germany. Monetary union brings interest rate convergence, and a drop in Italian and Spanish rates could create inflationary pressures. German monetary policy is relatively slack and there are indicators that the economy is recovering strongly, though it is unclear whether this is due to purchases being made before value added taxes rise, and mild weather. The German Bundesbank may wait before increasing interest rates.

Interest Rates, Economic policy

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German bonds: bund doubts

Article Abstract:

German bond yields have risen since Jan 1996, despite planned reductions in government spending and recession. This is linked to developments in the US, where yields are also up. German yields tend to have an impact on the UK. Some German analysts fear that German interest rates have dropped too far, and this has contributed to rising yields. Inflation appears subdued, but fears of inflation may persist even if German output increases while inflation remains stable.

Economic aspects, Capital market, Capital markets

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