German Finance Minister Christian Lindner urges the end of Germany’s expansionary fiscal policy, or it will face the risk of a fuelliing inflation, according to Reuters on Tuesday.
“Rising interest rates are already a signal for the government to see that it cannot continue like this,” said Lindner.
Germany has been monitoring inflation developments, and is already introducing a set of measures to tame inflation.
Among measures to be taken by the German government are electricity and gas price brake that come with savings incentives, alongside a tax-free inflation premium.
This allow employers to compensate for higher inflation without raising salaries, making it less likely for a potential wage-price spiral to happen, stated Lindner.
The International Monetary Fund recently warned that second round effects could lead to another inflation hike following some easing, and urged central banks to act decisively to control inflation in order to avoid such a scenario.
