2023-07-05 17:07:03
Bundesbank President Joachim Nagel has warned against prematurely regarding the fight against inflation as won. It was “too early to give the all-clear”, said Nagel on Wednesday at the opening of a Bundesbank symposium in Frankfurt. “Because inflation has broadened overall.”
Nagel said that from today’s perspective, interest rates should continue to rise. However, he kept a low profile on the question of whether this would mean another hike in September after the interest rate hike that was already expected at the end of July.
In mid-June, some of the “hawks” advocates of tighter monetary policy in the Governing Council had interspersed hints in their speeches that the ECB’s forthcoming interest rate hike in July would not be the last. Nagel also said at the time that interest rates might have to be increased further “after the summer break”. The head of the Belgian central bank, Pierre Wunsch, had even indicated that the rate hike cycle might not have peaked in September. Now it has become quieter.
Only in Germany had the inflation rate recently risen
In the meantime, the inflation rates for June for the various euro countries have been published – and Germany was the only country where the inflation rate rose. In Spain, the rate has fallen below the ECB’s target of 2 percent, and in Luxembourg, at 1.0 percent, it’s not far from zero.
First observers believe that the ECB will therefore refrain from raising interest rates in September. “I doubt that there will be a majority for another rate hike in September,” said Joerg Kraemer, the chief economist at Commerzbank.
Jari Stehn, Goldman Sachs’ chief European economist, and Karsten Junius from Bank J. Safra Sarasin, on the other hand, expect interest rates to rise in September. Junius only considers an “interest rate pause” in the euro zone, as recently seen in the United States, to be conceivable if the environment continues to deteriorate.
Italian Council member Ignazio Visco, who is considered one of the “doves”, ie those in favor of loose monetary policy, even said on Wednesday that the ECB could now keep inflation under pressure without any further rate hikes. Interest rates have already reached the “restrictive zone”.
Carefully determining the duration of monetary tightening rather than further hikes would have the benefit of allowing the ECB to assess the impact of its past rate hikes, the governor of Italy’s central bank said.
Nagel and Bundesbank Vice Claudia Buch were only connected virtually to the Bundesbank symposium because they were to advise the federal government in Berlin before the budget was passed.
Buch’s appearance was also followed with interest because the economist took over the Bundesbank’s banking supervision from fellow board member Joachim Wuermeling in April and is now being traded as a possible successor to ECB chief bank supervisor Andrea Enria. His term of office ends at the end of the year.
It was recently speculated that the personnel could be regulated in a package with the successor to ECB board member Fabio Panetta. In addition to the Spaniard Margarita Delgado, the Irish Sharon Donnery is said to be interested in the post.
In her welcoming address, Buch emphasized that banks are being hit twice by the current upheavals: “The adjustments in the real economy are reflected in their balance sheets, while at the same time they themselves are facing a digital transformation.” The Bundesbank Vice President mentioned the question of how many branches a bank still needs – and which sources of financing could still be regarded as “relatively stable and reliable”.
Buch also spoke out in favor of more in-depth disclosure requirements for banks: “This applies, for example, to the effects of climate risks – a loan to a glass manufacturer, for example, is associated with different climate risks, depending on whether the glass is melted using electricity generated from renewable sources or using natural gas. “
Robust banks that have their risks under control and are well capitalized could make an important contribution to the transformation. “Especially in times of upheaval, however, we cannot rely solely on the risk management of the banks,” said Buch: “Strong supervision is more important than ever.”
Bafin President warns of risks from “greenwashing”
Mark Branson, President of the Federal Financial Supervisory Authority (Bafin), emphasized that consumers urgently need more perspective in the thicket of supposedly “green” investments. “Investors still cannot see clearly and quickly enough how sustainable a product really is.”
You would get a lot of information, which is often too complex. “They’re almost drowning in transparency, but sometimes they’re not clear about what they’re buying when it comes to sustainability.” Branson says that less and more understandable information is needed. For example, investors need to be able to easily tell whether a product is investing in companies that are already “green” or in companies that are in the process of becoming “greener.”
At the same time, the Bafin President warned against products and services being sold as sustainable that are actually not: “Greenwashing destroys trust. That is one of the biggest risks of transformation finance.”
Gerald Braunberger Published/Updated: , Recommendations: 6 Christian Siedenbiedel Published/Updated: , Recommendations: 17 Christian Siedenbiedel Published/Updated: , Recommendations: 20 Christian Siedenbiedel Published/Updated: , Recommendations: 59
#Voices #higher #interest #rates #September #quieter