Wednesday, October 20

Germany’s Laschet says trusts ECB to keep inflation in check


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FRANKFURT — Armin Laschet, the conservative candidate bidding to succeed German Chancellor Angela Merkel in this month’s election, said he was confident the European Central Bank (ECB) would achieve price stability, as accelerating inflation hits savers.

“For me, it’s alarming when small savings, pensions, life insurances and building loan contracts lose value,” Laschet was quoted as telling the weekly Welt am Sonntag (WamS) newspaper.

“I’m sure the ECB will particularly fulfill its core task of monetary stability… But this also means that when interest rates rise again the debt burden becomes an even bigger problem for the state,” he said in Saturday’s edition.

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Laschet’s remarks a week ahead of the Sept. 26 general election stand in contrast to comments made by his key expert for fiscal and economic policies Friedrich Merz, who this week lashed out at the ECB’s loose monetary policy.

The ECB said this month it would trim emergency bond purchases over the coming quarter, marking a first small step towards unwinding the emergency aid that has propped up the euro zone economy during the coronavirus pandemic.

This year, the ECB expects inflation of 2.2%, above its 2% target, before falling to 1.7% in 2022 and 1.5% in 2023.

The latest German election poll, provided by Ipsos, puts the conservative CDU/CSU bloc at 21% and the Social Democrats (SPD) at 27%, piling pressure on Laschet to close the gap.

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In an attack on his main opponent, Social Democrat chancellor candidate and Finance Minister Olaf Scholz, Laschet intensified his criticism over a money-laundering probe that has involved raids on Scholz’s ministry.

Earlier this month, German prosecutors raided the Financial Intelligence Unit, an finance ministry agency, spotlighting Germany’s failings in tackling financial crime.

Shortly after the raids, Scholz – who also serves as vice chancellor – expressed frustration over how the probe had been handled by prosecutors.

“It’s breaking a political taboo when the vice chancellor questions the independence of the public prosecutor following a raid on his ministry,” Laschet told WamS. (Reporting by Christoph Steitz Editing by Helen Popper)

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