Germany's EUR500 billion investment plan for defence and infrastructure is likely to increase economic growth and bring some inflation “but not that significant” for the European Central Bank's 2% target, President Christine Lagarde said on Thursday.
“We all get over excited by amounts but we forget about time,” she told the European Parliament's economic affairs committee, noting that the German plan is still under process and scheduled to develop over 12 years.
The increase in German yields respond to the fact that markets see that growth will increase but the fact that spreads have tightened since the announcement has been perceived as the investment being of benefit to the eurozone as a whole.