(Bloomberg) -- German Chancellor Olaf Scholz struck an upbeat tone on growth prospects for Europe’s largest economy, pointing to slowing inflation and possible rate cuts in the near future.

“We are seeing good signs in terms of the real purchasing power of our citizens,” Scholz said during an interview with VRM media group on Monday. “We have inflation that is falling. Interest rates are also likely to go down again soon.”

Scholz’s comments followed a better-than-expected increase in industrial production, which climbed for a second month in February, the statistics office said earlier Monday. The 2.1% jump, led by construction, buoyed hopes that Germany may emerge from a shallow recession it likely witnessed in the last six months.  

Scholz said Germany is enjoying a “very good climate” that will usher in a return to growth. 

“Energy prices in particular are below the pre-crisis level for companies and for those who are now signing contracts,” he said, citing a tax cut on electricity for energy producers and reimbursements for larger companies. 

The government’s efforts to reduce bureaucracy and cut red tape will unleash additional growth forces, the chancellor said.

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