Low inflation is so historically important to Germany that the Euro Central bank raised interest rates by a quarter point on April 7 to 1.25%. This was the first rate hike since the summer of 2008. But now it is almost certain that the European Central Bank is going to raise rates again when it convenes in June according to an article in Wednesday, April 20’s Wall Street Journal, “Euro Zone Economy Expands”.
The inflation rate in the first quarter of the year was .8%, which is considered high. And the second quarter, if left unchecked, will probably go higher still. The Germans want to keep the interest rate at 1.5 to 2% annualized. March, 2011 by itself was 2.7% at an annualized rate.
Most of this growth is confined to France and Germany and Germany in particular. Greece, Ireland, Portugal, and Spain — the “pigs” — don’t keep pace.
Germany experienced the worst hyper-inflation in the history of the modern stock market in the early 1920’s, leading to the rise of Adolf Hitler.
The inflation game advertised on the European Central Bank website. It’s designed to help Europeans understand the economy.