The Bavarian Prime Minister calls on the ECB and the German government to take steps to reduce inflation

BERLIN (Reuters) – Germany’s Bavarian prime minister called on the European Central Bank (ECB) to tighten monetary policy on Wednesday to tackle rising inflation in Europe’s largest economy, according to an interview with Handelsblatt.

“Inflation is rising overall, and at the same time there are still zero interest rates for savers. It is true that there is a serious expropriation,” Markus Soeder, head of the Conservative Christian Social Union, told Handelsblatt.

“In the face of inflation, the ECB should slowly reduce its ultra-loose monetary policy,” he said.

Harmonized consumer prices rose by 5.7% in Germany last month, following a record 6.0% rise in November, above the ECB’s 2% target for eurozone price stability, according to initial data last week.

Soeder also said that the new federal government, led by Social Democrat Olaf Scholz, must take action.

“Germany has been suffering the worst price hikes since 1993,” Soeder told the newspaper. “So the government needs to provide urgent assistance to the citizens and the economy,” he said, suggesting the removal of the energy tax.

German government officials and central bank officials have said they hope to ease inflation even further in the coming months, as the temporary effects will be reduced.

The central banks of the US Federal Reserve have acknowledged that inflation may be more sustainable than expected, but the ECB has maintained its view that price growth will fall below its 2% target by the end of 2022.