FRANKFURT (Reuters) – Germany’s Bundesbank cut its forecast for inflation in Germany to about 0.25 percent in 2016 from 1.1 percent, also lowering its prediction for 2017 to 1.75 percent from 2 percent due to the falling price of oil.
The dramatic adjustment in the euro zone’s biggest economy means that the European Central Bank is all but certain to reduce its own forecast in March, a step that would typically require it to respond by loosening money policy further.
“Fluctuations in the price of oil typically have a very fast and noticeable effect on the price of energy for consumers,” the German central bank said in its report, adding that there was also an impact on the price of other goods.
(Reporting By John O’Donnell)
