Connect with us


German inflation could stay above 2%

German inflation is likely to accelerate from its already high level. The Bundesbank said in a monthly report, that it will stay above 2% through mid-2022. Inflation has surged this year on a plethora of one-off factors from tax hikes to supply bottlenecks and commodity price rises, fueling a debate about the need for exceptionally easy monetary policy. The Bundesbank said that the inflation rates between 4% and 5% are possible on a temporary basis. Inflation is then likely to decrease at the beginning of 2022.

The high readings of the past several months are temporary according to the economists. How much of these one-off price pressures may translate into permanent inflation through so-called second round effects, is going on as a debate. Even ECB President Christine Lagarde argues that many of the causes of high inflation are temporary. She also expects some of these factors to linger beyond the pandemic. The ECB expects the price growth to remain weak.

In the same time, conservative policymakers argue that the gap between expected inflation and the ECB’s 2% target is rather narrow. Hence, only a few of these second-round effects would need to materialize to shift inflation higher. On the ECB’s Governing Council, the conservatives are still in a minority. Hence, ultra-easy policy is likely to continue. But the ECB is expected to end a crisis-era stimulus scheme next March. The key debate will be whether to replace this lost support with other measures or not, in the upcoming months.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


Euro zone ministers expect inflation to slow in 2022

The acceleration of euro zone inflation, driven energy prices, is mostly temporary. Then the price growth will slow down again. The euro zone finance ministers agreed that, that too the next year as forecasted by the European Central Bank and the European Commission.

Paschal Donohoe, chaired the talks of the ministers in Luxembourg. In a news conference he said that there was also agreement that the inflation spike was not an argument against the transition to renewable sources of energy. This is under the EU’s ambitious plan of reducing CO2 emissions to zero by the year 2050.

Continue Reading


Under new rules, borrowing for investment sensible

British finance minister Rishi Sunak said that the government borrowing to fund investment was a sensible thing. This is to allow under new fiscal rules that he is likely to announce, unlike borrowing for day-to-day spending. He said that borrowing for capital investment that is going to drive up their growth is probably a sensible thing for them. And that too particularly in an environment of slightly lower interest rate. Sunak stated this in an event on the sidelines of the annual conference of Britain’s ruling Conservative Party. This event was organized by the Taxpayers’ Alliance advocacy group. Sunak stated in that event, that borrowing for more day-to-day spending is probably less something that you would want to have as part of your framework.

Continue Reading


IMF board to interview Georgieva-sources

The International Monetary Fund’s executive board is going to interview Managing Director Kristalina Georgieva. This is regarding that; its reviews claims that she pressured World Bank staff to alter data to favor China in her previous role. Board members were initially expected to meet with Georgieva. But spent their time working on other regular business matters.

The board members spent hours for questioning lawyers from the WilmerHale firm. This is about their World Bank investigation report which alleged that Georgieva, as the bank‘s CEO applied undue pressure on staff, to alter data in the flagship “Doing Business” report to benefit China. Then, an IMF spokesperson said that the IMF board remains committed to a thorough, objective, and timely review of the matter. Georgieva has strongly denied the accusations.

The upcoming interviews could prove pivotal in either increasing support for Georgieva. This is with many IMF shareholders are keen to wrap up the board’s deliberations on the matter. The fund’s most influential member governments, including the top shareholder the United States, have withheld public judgment. The World Bank tasked WilmerHale with investigating the “Doing Business” data irregularities identified in 2020. The law firm’s report contends Georgieva. The former World Bank President Jim Yong Kim’s office pressured staff to manipulate data so that the China’s global ranking in the “Doing Business 2018” study of investment climates rose to 78th from 85th.

Continue Reading