Bundesbank: Positive outlook in Europe despite deflation risk

The outlook for the German and eurozone economies is positive despite an increased risk of deflation, the head of Germany's central bank said Wednesday after announcing Bundesbank profits of 3.2 billion euros (3.5 billion dollars) for 2015.

"A rate of inflation below zero is once again possible in the first six months of this year," Bundesbank chief Jens Weidmann said. "[However,] there is absolutely no reason for pessimism; all in all, the economic outlook in the euro area is trending up."

Speaking from the Bundesbank's Frankfurt headquarters during an annual press conference, Weidmann announced Bundesbank profits of 3.2 billion euros for 2015, up from last year's 2.95 billion euros.

The profits, which have been transferred to the federal government in full, are attributable to lower risk provisions and higher interest income, Weidmann said.

Finance Minister Wolfgang Schaeuble included 2.5 billion euros in central bank profits in his 2016 budget proposal. The remaining 700 million euros will go towards the costs of dealing with an ongoing refugee influx.

Weidmann also weighed in on additional monetary stimulus from the European Central Bank (ECB), which he said would have "long-term risks and adverse effects that cannot simply be ignored."

The comment comes ahead of a March 10 meeting where the ECB is to consider ramping up its stimulus.

Last update: Wed, 24/02/2016 - 17:50
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