Tuesday, January 3, 2017

Inflation is rising – and with it, the pressure on Draghi – Handelsblatt

business: Rising Inflation in Germany – but no need to worry

Frankfurt/BerlinThe Inflation in Germany climbed to the turn of the year, the highest level since July 2013. Especially, rising energy prices have ensured that Goods and services in December, costing an average of 1.7 percent more than a year ago, as the Federal Statistical office announced on Tuesday. Alone in North Rhine-Westphalia, the annual rate of inflation rose in December to 1.9 percent.

In November, was the annual inflation rate at 0.8 percent. About the year 2016 saw the price pressure, however, remained subdued, with an average of the consumer prices rose by 0.5 percent, after 0.3 percent in 2015.

For the current year are aiming for the Federal government and the economy have an inflation rate of 1.6 percent. It would be the highest since 2012. Economists expect the annual inflation in the Euro area increased in December to 1.0 from 0.6 percent. The data will be published on Wednesday.

The price of the drive is primarily attributable to increases in individual sectors, especially energy. In December, energy prices increased 2.5 percent, and for the first time in three years. In North Rhine-Westphalia, heating oil rose in price in December by a good 21% and fuel cost of 7.4 percent. The turnaround in the energy is shown when looking at the annual average prices: Here are the NRW citizens of 2016 for the areas 17 percent for heating oil and almost eight per cent at the pump.

decisions of the ECB on 10. March 2016

  • the ECB cuts The key interest rate from 0.05 to 0.00 percent. The step itself has little direct impact. In particular, the associated Signal that the ECB is determined.

  • The ECB lowers the Deposit rate in the Eurozone of minus 0.3 to 0.4 percent. That is to say: banks, the overnight Parking money at the ECB, to pay an even higher penalty. Thus, the Central Bank wants to encourage financial institutions to grant more loans, instead of banking excess liquidity. The higher the penalty, the stronger the incentive, the calculus. However, this is a burden for the fragile banking sector. Therefore had been discussed in the run-up to the meeting of the Council a staggering of Deposit interest rate, similar to that in Switzerland. The negative Deposit rate would take effect only if the Central Bank is parked and liquidity of a Bank exceeds a certain upper limit.
    Draghi has decided against such a Modfell. This was implemented in a monetary Union with very different banks hard, he said.

  • The ECB of the volume of its monthly bond purchases, expanding from 60 to 80 billion euros. This increases the total volume up to March 2017 240 billion to 1.74 trillion euros. Bond purchases would be a Signal that the market understands, said the chief economist of the Berenberg Bank, Holger schmieding in advance.

    This step was, however, quite controversial. For the German Bundesbank, which sees a further easing of monetary policy in a critical way, is to swallow this pill is severe, as the reduction in the Deposit interest rate. Draghi said, however, the ECB’s governing Council had decided on measures with a “overwhelming majority”. The higher the volume the ECB is seeing its purchases of of your self-imposed rules, you may not buy Bonds whose interest rates below the Deposit rate (minus 0.4 percent). And you may not purchase more than 33 percent of the outstanding bond debt of a country.

    In the case of bonds issued by international organizations or development banks such as the European investment Bank (EIB) extends this Limit is now 50 percent of the outstanding bonds.

  • constraints to prevent from expanding the ECB in addition, the selection of the purchased bonds. In December, they expanded the range to bonds of regional and local authorities in the Euro area. Now she buys also of Euro-recording company bonds with good ratings (Investment Grade).

  • The ECB is expanding its program to lend with the banks on very favorable terms money in the long term, if you forgive more loans. Starting in June, four special credit lines should be launched called, in the jargon TLTRO II for financial institutions with a maturity of four years. The costs have been based on the Deposit rate, the ECB is now at minus 0.4 per cent, reduced. Banks can therefore earn money in order to borrow money.

    since 2014, the currency offer guardians of targeted cash injections. You want to move commercial banks to provide more credit to companies. However, many banks don’t need liquidity. This helps, that is probably why only some ailing institutions.

Since mid-2014, the lubricant of the world economy was mainly as a result of the Overproduction significantly cheaper. Shortly before Christmas, a Barrel (159 liters) of Oil in the North sea Brent crude oil was traded for well 54 dollars, in the summer of 2014, there were around 115 dollars. But it could be any sign of trend reversal, when the oil cartel Opec and other oil producing countries to make its announcement to reduce in 2017, the production to drive the price of “black Gold” to the top.

For the European Central Bank (ECB) is the rise in Inflation is good news. Because it strives for in the entire currency area stable prices, and this looks only at inflation rates of just under two per cent, guaranteed. Their boss, Mario Draghi, is holding on to the goal of two percent annual inflation. In March 2016, the Central Bank decided to ease key interest rates further – among other things, to allow Inflation to rise. There are no limits to what you’ll do, the Bank is within its mandate, to reach the target, Draghi said at the time.

can’t be a real success for the ECB chief, despite the slightly higher Inflation in Germany and other countries of the Euro-Zone (France, for instance, where Inflation is a new peak value has been reached). Because in the longer comparison, Inflation is still comparatively low.


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