Volker Wieland calls for more decisive action by the ECB (Augsburger Allgemeine)

Prof. Volker Wieland has called on the European Central Bank (ECB) to take a more decisive stance against rising inflation rates. This is necessary, also so that the expectation of further rising prices does not become entrenched, he said in an interview with Augsburger Allgemeine. "If we assume that the ECB will not react at all, then inflation expectations will rise more than if it is expected to react." That, he said, it has not yet reacted with its most important instrument, the interest rate. According to Wieland, a new ECB instrument is not appropriate.

"The ECB wants to create opportunities for itself to continue buying bonds from individual countries on a large scale, but then selectively. When German or Dutch bonds expire, for example, the ECB already reinvests in Italian or Portuguese bonds. With the new program, it should then be possible to buy additional bonds, with the aim of limiting these interest rate spreads." According to calculations with Lukas Nöh and Veronika Grimm, for all countries - assuming a constant debt ratio - interest expenditure would stabilize relative to economic output despite the current markups.

From Wieland's point of view, it is right for Germany to comply with the debt brake again in 2023: "Now is the time to set priorities. Uncertainty is high because of the war and a possible halt in gas supplies. Inflation and interest rates have risen - so you also have to look in Germany, not just in Italy, that you can reduce the debt ratio again."Translated with www.DeepL.com/Translator (free version)

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