March 30, 2014 / 1:16 PM / 5 years ago

German fin min expects ECB rates to rise - Der Spiegel

BERLIN (Reuters) - Germany’s finance ministry expects borrowing costs to rise next year as the European Central Bank will hike interest rates in response to an economic recovery, Der Spiegel magazine reported on Sunday, citing an internal document.

With the euro zone debt crisis receding and the economy picking up, “an active contribution towards overcoming the low interest rate policy is to be expected” from the ECB, the magazine quoted the ministry document as saying.

The ECB has kept interest rates at a record low of 0.25 percent since November and is expected hold them at that level at its next policy meeting on Thursday.

But the focus of debate in the region has been on whether the ECB will provide more rather than less monetary stimulus - given concern over whether falling rates of euro zone inflation could usher in an economically damaging period of deflation.

Even if inflation does begin to pick up, the bank has said it would keep rates at the current level or lower well into the recovery.

Der Spiegel reported that in view of a possible future rate hike, Europe’s biggest economy would in a year’s time have to pay more for its credit than it does now.

According to the document, borrowing costs could rise to more than 2 percent for 10-year Bunds from about 1.5 percent now.

Currently, Germany is profiting from ultra-low refinancing costs.

Writing by Madeline Chambers; Editing by John Stonestreet

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