The head of the Institute for Economics calls on the ECB to act.
(Photo: dpa)
Frankfurt After the interest rate increases in the USA and the high inflation rates in the euro area, economists at the Institute for Economic Research (Ifo) have called on the European Central Bank to correct its monetary policy quickly. “The interest rate hike in the USA leads to an appreciation of the US dollar against the euro, which increases inflationary pressure in Europe,” said Ifo boss Clemens Fuest of the “Augsburger Allgemeine” according to a preliminary report.
“In this respect, there is a certain pressure for the ECB to follow.” In contrast to Europe, a larger part of the inflation in the USA results from economic policy and not from energy prices. “However, that does not change the fact that the ECB must also act.”
ECB Director Isabel Schnabel says she expects the European Central Bank to raise key interest rates in July. “As things stand today, I assume that we will be able to raise interest rates for the first time in July,” Schnabel told the newspaper “Bild” (Friday edition) according to a preliminary report.
In the middle of the week she had explained in the Handelsblatt that an increase would then be possible. The ECB recently gave mixed signals about the further course of events. On Thursday, the head of the Oesterreichische Nationalbank, Robert Holzmann, spoke of the first rate hike in June. Other ECB officials have indirectly opposed July or said the process is more important than the actual timing. In view of the comparatively high inflation in the euro area, the ECB is under pressure to follow the USA and Great Britain with an interest rate hike.
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More: After the interest rate hike, investors are puzzling over how far inflation will go and whether the Fed will trigger a recession. The stock markets are slipping.