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EUROZONE

Schäuble fears Greece deal may fall through

German Finance Minister Wolfgang Schäuble expressed scepticism on Tuesday about whether Greece would be able to strike a deal with international creditors in the next few days on vital financial aid.

Schäuble fears Greece deal may fall through
Photo: DPA

"I'm somewhat sceptical whether that'll be possible by Monday. But I'm not ruling it out," Schäuble said referring to an upcoming meeting of the "Eurogroup" of eurozone finance ministers which will discuss releasing a new tranche of bailout aid to Athens.

Greece needs a deal to unblock €7.2 billion euros from its EU-IMF bailout before state coffers run dry.

Alexis Tsipras' hard-left government, elected in January on an anti-austerity agenda, is struggling to pay salaries and pensions without the promised loans.

Greece needs to repay almost a billion euros in debt and interest to the IMF by May 12.

The European Union and International Monetary Fund want Athens to carry out reforms pledged by previous administrations before it releases the final tranche of rescue funds.

But the Greek government insists it will not back down from 'red lines' on labour protection and wage cuts.

Schäuble said that "too much time has been lost already."

He insisted that Germany, like the other eurozone countries, was prepared "to do everything to help Greece within the framework of what was agreed."

"We don't like to speculate about a 'Grexit'" or Greek exit from the euro, Schäuble continued.

"We don't want that. But that doesn't mean we're prepared to do absolutely anything. Athens has perhaps wrongly assumed that," he said.

Schäuble warned that Greece's liquidity "has clearly diminished. And that means anything could happen."

SEE ALSO: Germany should fear Brexit more than Grexit

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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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