Bundesbank remarks in their latest monthly report
- Expects German economy to contract by nearly 10% in Q2
- German government stimulus package should bolster economic recovery
- It should also help improve consumer, business sentiment
- But that is unlikely to see much effect in Q2
- Construction boom withstood the pandemic for the most part
- Inflation to be "markedly negative" from July until year-end
- Should turn positive again in 2021, with base effects boosting 2H 2021 readings
Nothing from the remarks that really stand out too much as they continue to retain a subdued outlook on the German economy, with some room for improvement in 2H 2020.
That said, their take on inflation just means that the accommodative policy by the ECB will continue to stretch on for a prolonged period. As things stand, PEPP stimulus is set to run until the middle of next year but could very well be extended down the road.
