According to the German Christian Democratic Economic Council, the European Central Bank’s efforts to stimulate inflation are counterproductive. It allegedly threatens the stability of the single European currency and the euro area as such.
Following the last monetary policy meeting, the European Central Bank announced that its interest rates would remain extremely low in the coming weeks. The ECB aims to achieve 2% inflation in the euro area in the medium term, which currently marks the end of 2023.
However, in some euro area countries, price growth is already so high that it is becoming a serious problem. One of them is Germany. “Rising inflation is a worrying warning signal,” Wolfgang Steiger, general secretary of the CDU’s Economic Council, which has around 12,000 members and is close to Chancellor Angela Merkel’s Christian Democrats, told Reuters.
The inflation rate in Germany reached 3.1 percent year on year in July, while in June prices rose by only 2.1 percent. According to Steiger, this is proof that unlimited pumping of money into the economy is not a long-term solution. “The unprecedentedly expansionary monetary and fiscal policy will ultimately be paid for by the small saver,” added Wolfgang Steiger.