Volker Wieland expects higher inflation (Handelsblatt)

Prof. Volker Wieland is expecting inflation to rise in both the short and medium term. "Three percent inflation in Germany is possible at the end of the year," he said in an interview with "Handelsblatt." In this context, he expects prices to remain at a higher level even after the end of the corona crisis.

"So the inflation rate could also rise to three to four percent at times in the next three to five years," he continued. This will make it more difficult to exit the loose monetary policy. This is because, according to Wieland, high debt levels make it more difficult for central banks to raise interest rates. "In any case, the political pressure on central banks will be high," he warned.

The discussion about a possible rise in inflation has also been fueled by the book "The Great Demographic Reversal." The economists Charles Goodhart and Manoj Pradhan set out four theses as to why the times of low inflation are coming to an end.

Handelsblatt: "Die Inflationsgefahr wächst" (€)

Goodhart and Pradhan discussed their theories in an IMFS Policy Webinar with former ECB Board Member Peter Praet and Volker Wieland in January. Watch the video here.