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German economy could force European Central Bank to raise borrowing costs

26-Oct-2010 12:36 PM

Standard & Poor’s stated Germany’s strengthening economy may force the European Central Bank to start raising borrowing costs “sooner rather than later" (Bloomberg, 26-Oct-2010).

Standard & Poor’s: “As Germany advances in recovery, it will likely continue to bounce back more quickly and outpace the growth rates of other euro zone members. We think the pull on the ECB to base the timing of its exit strategy from accommodative monetary policy on the euro zone’s largest economy will be strong. Germany appears to be displaying signs of a more broadly based and more dynamic pickup than those of most other euro zone members. The ECB acting sooner rather than later could spell a fresh spike in the euro versus the dollar," Jean-Michel Six, Chief European Economist. Source: Bloomberg, 26-Oct-2010.