Interest rates are influenced by a variety of factors, including domestic economic conditions and movements internationally in interest and exchange rates. In the circumstances, it is not the practice to provide forecasts of future trends.
The economic and monetary terms of the draft treaty on the creation of a common German economic and monetary area were finalised only last week and remain to be ratified. Commentators vary their assessments of the implications of these terms for Germany and the rest of the EC. However, the German Government, supported by the Bundesbank, is confident that German economic and monetary union will not have adverse repercussions on interest rates in Germany nor, by implication, the EC.
I share the confidence of my German colleagues and would add that, in current circumstances, there is no reason to believe that, if there were an unexpected increase in German interest rates, it would lead to a corresponding increase in other EMS countries.