A bit of surprising news out of Estonia, as the ECB has backed the Euro hopeful with the lowest debt as percentage of GDP but the 4th largest inflation which will not sit well with the Bundesbank.
European policymakers put Estonia on track to adopt the euro in 2011, even as the European Central Bank warned that the Baltic state may struggle to keep inflation under control.
The European Commission said Estonia, a one-time Soviet satellite that joined the European Union in 2004, passes the economic tests to become the euro’s 17th member. It called Estonia’s progress in reducing inflation “sustainable†in a report in Brussels today.
In a separate judgment released simultaneously in Frankfurt, the ECB said Estonia’s conquest of price pressures reflects “temporary factors†and “it may be difficult to prevent macroeconomic imbalances, including high rates of inflation, from building up again.â€
