© Provided by Business AM
Consumer prices in the euro area rose more than expected in December. This was shown by preliminary figures from Eurostat on Friday.
The inflation rate was 5.0% in December. In November, this rate was 4.9% and in October 4.1%. The economists’ expectation for December was 4.7%.
Economist Volker Wieland, professor of monetary economics at the University of Frankfurt, criticized the passivity of the ECB in an interview with the Wirtschaftswoche. According to him, ruling out a possible rise in interest rates in 2022 remains difficult to justify. “In view of the errors in the assessment of the development of inflation, it is very risky to link current monetary policy to forecasts which carry so far into the future”. He advises the ECB to follow the lead of the US Federal Reserve. This means that you have to start cutting interest rates as early as 2022 instead of 2023 or even 2024.
Wieland is far from an exception. More and more experts are refuting the ECB’s thesis that rising prices are only a temporary phenomenon. Dirk Jandura, chairman of the Association of German Wholesalers, Foreign Trade and Services (BGA), is clear: “The ECB is not doing too little, it is doing things wrong. “
Jim O’Neill, former chief economist and chairman of Goldman Sachs Asset Management, agrees. In the same publication, he warns against what he calls “an inappropriate adherence to an ultra-expansive monetary policy”. “The return to a ratio in which inflation-adjusted interest rates correspond to some extent with the potential growth of economies is long overdue. “
FED: “The end of the era of zero interest rates is near”
The minutes of the last FED meeting on Wednesday stirred the markets. The biggest losers are technology and growth stocks. Rising interest rates weigh on future earnings. But at least this is plain language: the end of the era of zero interest rates is near. The Fed’s massive bond purchases will stop. The roadmap to normality is ready.
Unlike the ECB.