The head of Deutsche Bank is worried about the high debts of companies worldwide.
(Photo: dpa)
Frankfurt, From the point of view of Deutsche Bank boss Christian Sewing, the central banks have to brace themselves against the soaring inflation by raising interest rates. “Central banks around the world will have to take countermeasures,” said Sewing on Tuesday at the bank’s digital New Year’s reception, according to the text of the speech.
In the USA it is considered agreed that the Fed will raise interest rates for the first time in March. “By the end of the year, our economists expect at least three further steps. And the ECB will also have to follow suit,” said the head of Germany’s largest financial institution.
In view of the increased risk of inflation, the European Central Bank (ECB) backed off a bit last week from its refusal to turn around interest rates this year. After Thursday’s Council meeting, ECB President Christine Lagarde did not repeat her earlier statement that an increase in 2022 was very unlikely.
The ECB will now carefully evaluate the incoming data and then make a decision in March, she said. However, Lagarde left open whether the ECB will then switch to a tighter line. “I would call this a historic turning point after the euro zone has lived de facto interest-free for more than a decade,” Sewing said.
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“The rising prices are also a result of changes in global supply chains,” Sewing said. “Today there is hardly an area of the economy where there is no shortage of materials or components.” The situation is reminiscent of the oil price shock – with one difference: “While the 1970s were characterized by a supply shock, the distortions on the demand side are now also at play a key role. Fueled by government spending in the trillions, global consumer demand has reached unprecedented dimensions.”
Governments around the world “did a very good job when it came to protecting the economy from a corona depression quickly and pragmatically,” said Sewing. “But now we have to think about how to get out of our dependence on gigantic fiscal programs and easy monetary policy.”
However, the Deutsche Bank boss is concerned about the high debts of companies, states and private individuals worldwide. As early as 2020, the mountain of debt was higher than ever at a total of 226 trillion US dollars. And in 2021 it went further up. “This debt burden is simply unsustainable and a constant potential source of fire for global financial markets,” he warned.
More: Deutsche Bank starts the final sprint in the restructuring – highest profit in ten years.