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Leading German institutes see inflation risk from ECB bond-buying

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BERLIN, Oct 11 (Reuters) - The European Central Bank's (ECB)plans to buy bonds of struggling euro zone countries breaks thetaboo of financing states and increases the danger of inflation,Germany's leading economic institutes said on Thursday.

"(The institutes) see the risk of a mid-term rise ininflation. This process could be triggered by the ECBeffectively providing monetary financing for states," aconsortium of institutes said in their twice-yearly report.

"The ECB's decision could shake the main pillar of thecurrency union, namely the goal of price stability. Due to theseconditions the ECB is no longer independent of fiscal policy."

The institutes, whose analysis flows into the Germangovernment's own economic forecasts, also halved their growthexpectations for next year on the back of the euro zone crisis.

(Reporting by Michelle Martin)

((MichelleHannah.Martin@thomsonreuters.com)(+49 30 2888 5223))

Keywords: GERMANY INSTITUTES/