The statements of the finance ministers of Greece and Germany just before Papandreou-Merkel meeting will be indicative of the situation.
German Central Bank stated on Monday its opposition to the purchase of government bonds in lower rates by Eurozone’s current stability facility (EFSF) as a way to reduce Greek debt.
Merkel’s recent defeat in Hamburg has increased the frustration in the Greek side, whether it is a right time for a meeting between the Greek PM and the German Chancellor.
Additionally, European Central Bank sources state the risk of inflation in Eurozone caused by both the U.S. monetary policy and the impact of the unrest in Arab world on fuel prices.
Stabilized upward inflationary trends dispute the overall planning of the competitiveness pact as price stability is considered a cornerstone.
It remains unknown how quickly the ECB will address this problem, while there is a growing interior opposition, which is demonstrated by the stance of German Central Bank.
In any case, the meeting between Papandreou and Merkel will be held under undesirable conditions, leaving no optimism on a positive response. The markets may anticipate that, intensifying pressures on Greece, Portugal and Ireland.
source: CAPITAL
