‘Very damaging’: ECB policy fuels fears for German economy

Andresen’s comments were echoed by Sander Tordoir, a senior economist at the Centre for European Reform, who told Euractiv that “most of the data suggests that the ECB should cut aggressively and rather soon”, although he didn’t expect the ECB to actually cut rates “until April or June”.

Tordoir also pointed to studies – including by the ECB itself – which suggest that inflation in the eurozone, unlike in the US, is largely supply- instead of demand-driven.

“The eurozone has essentially been unlucky and has been hit very heavily by not only the pandemic supply shock, but also the supply shocks from Russia’s invasion of Ukraine,” he said.

“And the weakness in Europe is very much in France and Germany. So it’s at the heart of the eurozone economy. Germany has been weaker for longer. The latest round of soft economic indicators in France are looking pretty bad as well,” he added.