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German political gridlock not impacting sentiment - Bundesbank chief
November 29, 2017 / 5:35 PM / 14 days ago

German political gridlock not impacting sentiment - Bundesbank chief

FRANKFURT (Reuters) - The German economy is roaring ahead and there are no signs that difficulty in forming a government is noticeably affecting business sentiment, Bundesbank President Jens Weidmann said on Wednesday.

Deutsche Bundesbank (German Federal Bank) President Jens Weidmann attends the ‘G20 Africa Partnership – Investing in a Common Future’ Summit in Berlin, Germany June 13, 2017. REUTERS/Axel Schmidt

More than two months after national elections, Europe’s economic and political powerhouse is still without a government and officials say coalition talks may now properly begin only in the new year.

“Recent economic indicators do not suggest that the difficult process of forming a government has noticeably clouded sentiment,” Weidmann, who sits on the European Central Bank’s Governing Council, said in a speech.

Calling German economic growth “exceptionally good”, Weidmann said that the expansion would continue for some time, thanks to solid business sentiment and the highest rate of employment since German unification in 1990.

“Updated (euro zone) forecasts come out in two weeks, in December as usual, on the basis of detailed country projections,” Weidmann said. “Indications are that the economic outlook will be at least as good (as previously), if not better. Many short-term indicators have surprised positively.”

Repeating his long standing criticism of the ECB’s loose monetary policy, Weidmann said that a less expansive stance would be justified. The ECB agreed last month to halve asset purchases but extended the bond purchases by nine months.

“One thing is clear: even after the end of net asset purchases, euro zone monetary policy will continue to be very expansionary,” he said.

Reporting by Balazs Koranyi; editing by Mark Heinrich

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