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Inflation in Key German States Remains High

BERLIN, March 1 (Reuters) - Inflation in five German states was largely unchanged in the high single digits in February, pointing to no let-up in stubborn price pressures at the national level.

Annual inflation in Saxony, Bavaria and Brandenburg was at the same level as in January, while it rose by 0.2 percentage points in North Rhine-Westphalia, Germany's most populous state, and Baden-Wuerttemberg.

Preliminary pan-German inflation December data is due at 1300 GMT.

A Reuters poll of economists has forecast national inflation, harmonised to compare with other European Union countries, easing to 9.0% in February from 9.2% in January.

Germany's figure will be closely watched after two of the euro zone's biggest economies - Spain and France - posted unexpected rises on Tuesday, pushing up European Central Bank rate hike expectations and challenging the narrative that a rapid easing in price growth is under way.

The ECB has raised interest rates by 300 basis points since July and promised another oversized move in March, but some policymakers have called for more measured action after March as inflation is now off the highs it hit in October.

Bundesbank President Joachim Nagel pushed back on those calls on Wednesday, saying recent energy price falls may help bring down inflation in the near term, but they do not impact the medium term and price growth was at risk of getting stuck above the ECB's 2% target.

"The interest rate step announced for March will not be the last," Nagel said in a speech. "Further significant interest rate steps might even be necessary afterwards."

Writing by Miranda Murray, Editing by Rachel More and John Stonestreet

Source: Reuters

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