Interest rate.  The German Central Bank expects more significant increases!  - Insolence

Interest rate. The German Central Bank expects more significant increases! – Insolence

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Is the rate hike over yet?

It is very likely that you are actually just starting out.

In the last attic JT dedicated to interest rates (video provided below) I showed that in the 80s, to break inflation you needed to push rates well above inflation rates in order to have positive real interest rates. So when inflation was 14%, rates were 17%!

With inflation above 10% in the coming months in the Eurozone, rates currently at 0.75% are unlikely to “break” inflation.

This is exactly what the head of the German Central Bank thinks, whose last words are collected in this La article here

“Was the historic 0.75% rate hike decided this week by the European Central Bank just a first step? This is what Joachim Nagel, the president of the Bundesbank, the German central bank, believes. According to him, “the step taken on Thursday” by the European Central Bank to raise its reference rate by 0.75 percentage points “was a significant signal”, said Joachim Nagel. And to warn: “If the inflationary situation remains as it is, other significant steps will have to be taken,” he warned..

Inflation continues to rise.

“We have indications that inflation is spreading in many areas” of the economy, Joachim Nagel added. The head of the German central bank estimated that the inflation rate in Germany could reach a level “above 10%” for a year in December, a period that, in his opinion, should mark the peak of the current inflationary wave.

The Bundesbank has so far been talking about a 10% rate in the last few months of the year and has thus darkened its forecast a bit more. In his opinion, inflation should slow down in 2023, but Mr. Nagel estimated that it should remain “above 6%” next year, a level “too high”.

In these conditions, it is inevitable that the tightening of the cost of credit in the euro zone will continue, said the head of the German central bank, despite the negative impact that this policy could have on growth. »

And so much for the recession. If Buba’s boss explains that there is a high chance that Germany will enter a recession from the 3rd quarter, it is still necessary to raise rates.

Again, inflation is not tied to low rates.

Inflation is linked to astronomical energy prices that are transmitted to the entire production chain and therefore to all levels of the economy, including the digital one, from computers, internet and networks, c is above all energy!

Carlos Sannat

“This is a ‘presslib’ article, that is, free to reproduce in whole or in part as long as this paragraph is reproduced below. is the site where Charles Sannat expresses himself daily, offering cheeky and uncompromising analysis of economic news. Thanks for visiting my site. You can sign up for the daily newsletter for free at »

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