ECB's Weidmann says euro zone not in deflationary cycle
BERLIN, March 29
BERLIN, March 29 (Reuters) - The euro zone is not in a deflationary cycle and the European Central Bank should not overreact to a fall off in inflation which is largely due to cyclical factors which are likely to be temporary, Bundesbank President Jens Weidmann said on Saturday.
The head of Germany's central bank, who is also a member of the European Central Bank's governing council, said that about two thirds of the falloff in euro zone inflation could be attributed to energy and food prices.
"Monetary policy should respond to such factors only in the event of second round effects," said Weidmann at a conference in the German capital. (Reporting by Patrick Graham and Reinhard Becker; writing by Madeline Chambers)
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