In its monthly report published today, the German central bank said the outlook for the German economy improved perceptibly citing the upbeat outlook despite risks relating to the sovereign-debt crisis.
The central bank sees that in the first quarter of 2012 external factors will continue to weigh on production, while from the second quarter onwards cyclical stimuli could gain the upper hand. The bank also said that the outlook for the global economy has improved as well.
In the report the bank sees support for the economy to continue to recovery saying vigorous construction demand will provide the economy with a strong stimulus for the foreseeable future and private consumption is likely to continue to buoy economic activity.
On the monetary policy, the bank said that the euro area monetary policy is likely to continue to be very expansionary yet for the German banking system the bank sees that it is currently very generously supplied with liquidity as a result of the inflow of funds from other euro-area countries adding that the Bundesbank doesn't plan to participate in the efforts to create more ECB eligible collateral.