BERLIN — The German government moved Friday to allay domestic fears of runaway inflation after hints by the central bank that it would soften its conservative monetary policy.
Comments by Bundesbank officials earlier this week were interpreted by economists as a major shift in the central bank’s postwar stance.
This prompted mass-market daily Bild to front its Friday edition with the headline "Inflation Alarm!," invoking Germany’s post-World War I national trauma of rampant inflation.
But Foreign Minister Guido Westerwelle said price stability is a "core concern" of the government.
He told parliament Friday that even with Europe badly in need of growth "the printing of money can’t be an answer."
The European Central Bank’s target is to keep inflation in the 17-nation eurozone just below 2 percent, but it stood at 2.6 percent in the year to March.
In Germany, the annual inflation rate in April was 2.1 percent, and Finance Minister Wolfgang Schaeuble indicated Thursday that it could go as high as 3 percent.
"As long as inflation rates are in the corridor between 2 and 3 percent, we may not be quite under 2 percent but we’re in an area that is tolerable," he told reporters.
Bundesbank chief Jens Weidmann sought to squash what he described as an "absurd discussion," insisting that "citizens can rely on the vigilance of the Bundesbank."
The ECB’s mandate to keep eurozone inflation just below 2 percent "can in individual cases mean that inflation in Germany temporarily lies above the average and at the same time is under the average in other euro countries," Weidmann was quoted as telling the daily Sueddeutsche Zeitung.
