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German Court Rules In Favor Of Bailout Fund, With Conditions

ByThe National Bank of Canada
Published 09/13/2012, 01:33 AM
Updated 05/14/2017, 06:45 AM

Germany’s Constitutional Court ruled that the country can legally participate in the eurozone bailout fund and budget agreement. However, the government would need the German parliament’s approval before increasing its current contribution of €190 billion. Predictably, the euro then gained nearly 50 points against the greenback. Various market indexes followed suit with most posting gains this morning.

In economic news, Germany's Consumer Price Index rose 2.1% in August. Markets were forecasting a 2.0% increase. While some EU countries are in a deep recession, increased inflation in Germany would be bad news for the Central Bank, which must control inflation with a single key rate for the zone. The U.K. had only some 15K fewer jobless last month, surprising news given the recession currently underway in this country.

There is little news from North America this morning. Markets are waiting for the Fed's decision regarding a potential third round of quantitative easing (QE3).
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