Bundesbank upgraded its growth forecasts for 2017 for Germany. The economic growth is expected to be 1.7% in 2015, up from the previous estimate of 1.0%, in line with the previous estimate, and 1.8% in 2016, in line with the previous estimate, and 1.7% in 2017, up from the previous estimate of 1.5%.

"The German economy is currently following a growth path that is primarily underpinned by domestic demand," the Bundesbank said in its statement.

Inflation is expected to be 0.2% in 2015, down from the previous estimate of 0.5%, 1.1% in 2016, down from the previous estimate of 1.8%, and 2.0% in 2017, down from the previous estimate of 2.2%.

Inflation forecasts were downgraded by a further drop in oil prices.

"The main drivers are the favourable labour market situation and substantial increases in households' real disposable income, though foreign trade is currently being hampered by frail demand from the emerging market economies," Bundesbank President Jens Weidmann said.