The crisis in global financial markets is already easing, but is not over yet, according to Axel Weber, president of the German central bank or Bundesbank, on Monday.
“Here and there we are seeing signs of recovery,” Weber said in Munich. The indications were “that further adjustment processes in global financial markets still have to occur and that the path ahead will not always be a smooth one.” Weber, whose bank is the key voice within the European Central Bank, said regulators would have to step up their checks. The crisis might also reduce growth in the eurozone at a time when there were “strong upside risks” of inflation, Weber added. He said both money supply and credit growth were persistently high at a time when euro inflation was running at 3.6%, well above the level of just under 2% that is tolerated by the ECB. He said that meant increases in euro interest rates were an option. At the start of this month, the ECB left its prime rate steady at 4%. Some politicians and labor leaders are demanding rate cuts. (m&c.com)