Counter inflation with rate hike, Bavarian minister urges ECB

Reuters reports that Bavaria's finance minister, Albert Fueracker said that higher inflation is compounding the plight of savers and the European Central Bank should respond by raising its interest rates from 0%.

Germany's annual consumer price inflation accelerated in May, advancing further above the ECB's target of close to but below 2%, the Federal Statistics Office said on Monday.

"Germany is a country of savers. The ECB's longstanding zero interest rate policy is poison for typical savings plans," Fueracker, a member of Bavaria's conservative Christian Social Union (CSU), told.

"In combination with the now rising inflation, the expropriation for savers is becoming more and more noticeable. Bavaria has been warning for years that the zero interest rate policy must be ended - now it is high time," he added.

Conservative Germans have long complained that the ECB's 0% interest rates hurt savers as they are left with little if any gain - a problem compounded by rising inflation eroding the value of their nest eggs.

On Tuesday, the German federal government's economy minister, Peter Altmaier, said he was "watching this development with inflation very closely" but could not pass judgment on it yet.