As German inflation slows, speculation grows for ECB intervention

Inflation in Europe’s largest economy, Germany, has settled with a slow reduction likely in this quarter, which will mean it is going to be easier for the European Central Bank to lower interest rates further to stimulate the euro zone economy.

In the month of September, inflation in one German state has fallen down to 2.7 percent from 3.1 percent according to the state’s statistics office in Stuttgart, with figures for the rest of Germany to be released later today.

The reduction is, in part, due to the sudden slump in the price of a barrel of oil which has halved from it peak at $147 a barrel in mid-July.

The price of oil is having an affect across the euro zone as inflationary pressures are subsiding although the main cause for concern now lies with economic growth and the fall in exports.

The European Central Bank President, Jean-Claude Trichet, has been a man very much in the limelight of late. He has indicated that the bank may continue to cut borrowing costs with analysts predicting a 0.5 percent rate cut next month.

The financial crisis across the globe is seemingly deepening, the economies of France, Italy and Germany have all shrunk in the second quarter and predictions are that this will continue to be the case for the next few months.

It is hoped that with German inflation slowing, this has helped to stabilise the Union, although it has yet to be seen how the rest of Germany will fair.

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