The Bundesbank said the German growth, which is the main catalyst of European growth last year and this year, is predicted to lose steam over the coming few months after the robust 1.5% expansion recorded in the first quarter.

The bank revealed that despite the accelerating growth rates and low unemployment level, the economy still faces risks stemming from the rapid rise in prices which may elevate more with the ECB's expansionary monetary policy.

The stabilizing effects emanating from domestic demand can only take full effect in a tension-free environment, the Bundesbank added.