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GREECE

Schäuble insists: Greece will answer to Troika

German Finance Minister Wolfgang Schäuble insisted Tuesday that urgent technical talks on extending Greece's bailout would involve the "troika" of creditors, despite claims by Athens that the much-loathed group would play no part.

Schäuble insists: Greece will answer to Troika
German finance minister Wolfgang Schäuble. Photo: DPA

The influential Schäuble was speaking in response to a claim by Greek Finance Minister Yanis Varoufakis that Athens would deal "individually" with its EU, IMF and ECB creditors when bailout talks begin on Wednesday.

"Well, then his ideas have to be corrected," Schäuble told journalists in Brussels, a day after eurozone ministers agreed to begin talks that could lead to more cash for Athens and an extension of its current bailout beyond June.

"The institutions will do that together," he said.

Greece agreed with eurozone partners on Monday that talks in Brussels on Wednesday would be accompanied by visits to Athens from officials from the European Commission, International Monetary Fund and European Central Bank.

While seemingly minor, the format of the technical talks that begin on Wednesday between Greece and its creditors is a sorely sensitive issue in Athens.

After five years of painful austerity, Greece's leftist government swept to power in January on a hugely popular pledge to refuse all dealings with the troika team of creditors that saw through the tough reforms during two bailouts since 2010.
Prime Minister Alexis Tsipras has backed down on several of his anti-austerity promises, but seeing a return of the troika to Athens would be one of the most painful climbdowns.

During negotiations over the past month, Greece and many eurozone officials have started talking of the "institutions" instead of the "troika" in a nod to Greek sensitivities.

Since the leftists took office in Greece, the outspoken Varoufakis and Schäuble have engaged in a war of words, though the two men sat down after the ministers' meeting on Monday.

"He does not have an easy job. We met yesterday for long and intensive talks," Schäuble said in a rare moment of sympathy towards Varoufakis.

 

"I always tell him I would not like to change with him," he said, without revealing much about the content of the one-on-one talks.

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ECB

Inflation rose in Germany in December: report

Inflation in Europe's largest economy Germany clambered higher in December, official data showed Friday, but remained short of the European Central Bank's target for the 19-nation eurozone.

Inflation rose in Germany in December: report
Prices in Germany are rising, but not as fast as they should be. Photo: Jens Büttner / zb / dpa
Price growth hit 1.5 percent year-on-year last month, statistics authority Destatis said, some 0.4 percentage points higher than in November.
   
And it reached the same level when measured using the Harmonised Index of Consumer Prices (HICP) yardstick preferred by the ECB.
   
But while German price growth was headed in the right direction, it was still well short of the ECB's just-below-two-percent goal. Over the full year 2019, inflation averaged just 1.4 percent.
   
“There is little sign of sustained growing price pressure that could prompt the ECB to rethink its ultra-expansive monetary policy,” said economist Uwe Burkert of LBBW bank.
 
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Here's a graph put together by the German newswire DPA, showing how the inflation rate in Germany has fluctuated between 2008 and 2019. 
 
 
 
The ECB has set interest rates at historic lows, granted hundreds of billions of euros in cheap loans to banks, and bought more than 2.6 trillion euros ($2.9 trillion) of bonds in efforts to keep credit flowing to the economy, stoking growth and inflation.
   
But it has fallen short of its eurozone-wide price growth target for years, predicting last month it would inch up to just 1.6 percent by 2022.
   
Economists have pointed to both uncertainty over political events, like trade wars and Brexit, and long-term developments like ageing populations as possible reasons for sluggish growth and inflation.
   
Under new chief Christine Lagarde, the ECB plans to launch a wide-ranging “strategic review” this year, its first since 2003, that could adjust its tools or even reexamine the inflation target itself.
   
In the meantime, she has urged countries — like Germany — with sound government finances to lift spending in hopes of juicing the economy.
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