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MNI INTERVIEW: ECB Hawks Fly Away As Germany Slows-Wyplosz

(MNI) LONDON

ECB could be forced to cut sooner and faster than it had expected, Charles Wyplosz says.

The sharp deterioration of Germany’s economy has prompted a sudden about-face by hawks at the European Central Bank, which now looks likely to start cutting rates before the Federal Reserve, by as early as the first quarter and perhaps in 50-basis-point increments, prominent economist Charles Wyplosz told MNI.

Germany looks “particularly weak,” now that real rates have turned positive at the same time as Berlin has been forced to scale spending plans following a Constitutional Court defeat, Wyplosz said in an interview. (See MNI INTERVIEW: German Budget Faces "Severe" Cuts-Gov't Advisor)

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The sharp deterioration of Germany’s economy has prompted a sudden about-face by hawks at the European Central Bank, which now looks likely to start cutting rates before the Federal Reserve, by as early as the first quarter and perhaps in 50-basis-point increments, prominent economist Charles Wyplosz told MNI.

Germany looks “particularly weak,” now that real rates have turned positive at the same time as Berlin has been forced to scale spending plans following a Constitutional Court defeat, Wyplosz said in an interview. (See MNI INTERVIEW: German Budget Faces "Severe" Cuts-Gov't Advisor)

Keep reading...Show less