Bundesbank talks of 'leeway' on rates

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FRANKFURT - Helmut Schlesinger, president of the Bundesbank, hinted yesterday that the central bank might relent on high interest rates, as official figures showed the German economy in decline for the third successive quarter, writes John Eisenhammer.

Mr Schlesinger, who was addressing economists and policy- makers at the private G7 advisory council meeting in Frankfurt, said the fight against inflation 'does not rule out all leeway for the Bundesbank's monetary policy'.

The Bundesbank 'must find the right balance in the application of our monetary policy'.

Confirmation of the extent of the drop in the economy came from the statistical office. Taking last year as a whole over 1991, GNP in western Germany grew by 0.8 per cent, the worst performance since the recession in 1982. Pan-German GNP grew in 1992 by 1.3 per cent. Gross domestic product was up just 1.5 per cent after growth of 3.7 per cent in 1991.

Hans Gunter Merk, head of the statistical office, described the economic situation as 'fragile'. Most economic institutes have forecast a western German GNP decline for 1993 of between 0.5 and 1 per cent.