Banks: Higher inflation persists longer | Free press

For a long time, European currency watchdogs saw the rise in inflation rates as temporary. But inflation is going up and down. The BdB banking association calls on the ECB to intervene more decisively.

Frankfurt / Berlin.

According to the BdB private banking association, people in Germany will have to adjust to higher inflation in the long run.

“Due to the statistical base effect on energy and commodity prices, the inflation rate is set to decline slightly again over the course of the year. With rates above 3 percent, consumer prices should also well exceed the 2 percent target. appointed by the European Central Bank on average over the coming year. ” – writes the German Banking Association (BdB) in a recent study published on Thursday.

According to preliminary data from the Federal Statistical Office, the annual inflation rate rose to 7.9% in May. In united Germany, there has never been inflation at this level, the last time in the old federal states was in the winter of 1973/1974. During this time, oil prices rose sharply in the wake of the first oil crisis. Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro.

Much higher trend indicator

According to BdB estimates, “more and more structural changes will shape the price development in the coming years”: labor shortages, restructuring of the economy towards sustainable development and reorientation of global production and supply chains. “There are therefore indications that inflation rates in Germany and the euro area will develop at a much faster pace in the coming years than in the past two decades.”

The European Central Bank (ECB), which is aiming for medium-term stable prices with 2% inflation for the euro area as a whole, has decided to act after much hesitation. The central bank announced that it will now cut negative interest rates on deposits at the level of minus 0.5 percent. two increases in July and September this year. Rising inflation can be combated with higher interest rates.

BdB demands from the ECB more speed in changing interest rates. “High inflation is burdensome for consumers and worries the economy. Inflation expectations are also rising significantly. The negative key interest rate has long ceased to fit into this situation, ”said BdB CEO Christian Ossig of the German Press Agency. “The ECB should end its negative interest rate policy with a large interest rate hike of 50 basis points before the summer break in July. That would send an important signal to consumers and the parties to the collective bargaining.”

However, the chief economist of the ECB Philip R. Lane has already weakened hopes for a faster end of negative interest rates in the euro zone. “We now see that it is appropriate to phase out negative interest rates by the end of the third quarter and that the process should be gradual,” Lane told Spanish newspaper Cinco Días. Normalization usually occurs in steps of 25 basis points, so that a rate hike of 0.25% will be higher. at the ECB Council meetings in July (21 July) and September (8 September) they were the benchmark, Lane explained in an interview. (dpa)

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