The inflation rate in September in the Euro Zone was 3%. That was the highest rate since October, 2008, well above the target rate of just below 2%. The ECB won’t be able to lower the interest rate because of the high inflation rate, even though the economy has turned south.
It’s possible that early in 2012 the ECB will reverse its two interest rate increases of earlier this year. But this will happen only if the inflation rate goes south.
A slowdown next year in the German economy has been predicted.
The specter of a bad economic situation and high inflation has haunted Germany since the 1920’s when hyper-inflation ruined the stock market, made the currency worthless, brought down the Weimar Republic, and started Hitler on his path to taking over the country.