According to Robert Lind of ABN Amro, the figures make it less likely the Bundesbank will raise German interest rates again. The last German rate rise was badly received in France. The Bank of France followed the Bundesbank lead and increased rates, despite government concern about unemployment.
"The risks to monetary union are political, not economic," commented Julian Jessop of Nikko Europe.
The re-election on Tuesday of pro-European Oskar Lafontaine as leader of the German opposition has also boosted EMU's chances of starting on time, according to Mr Jessop. "We are thinking of revising our probability [of EMU starting on time] upwards," he said yesterday.
Mr Lafontaine's main rival is Eurosceptic Gerhard Schroder, currently Prime Minister of Lower Saxony. Following this week's vote, Mr Schroder is less likely to emerge as the Opposition's challenger to Chancellor Kohl in next September's federal elections.