"Interest rates do not just go up because of inflation fears," he said.

"Anything above a 0.6 percent increase will probably fuel inflation fears."

The biggest reason for that stance has been the fear of higher inflation, which the central bank wants to keep below 2 percent a year.

With prices down there is less fear of inflation accelerating.

But inflation fears have edged up a bit in the last couple of weeks.

The fear of inflation continues to dominate the bond market.

The fear of inflation then is now only dimly remembered by many.

Inflation fears lie behind gold's move, but not everyone is frightened.

However, just a few days later, without warning, the German central bank raised its interest rates in response to fears of inflation.

For that reason, he said the market could rally in the second half of the year as inflation fears ease.