In an interview with Börsen-Zeitung, Prof. Volker Wieland outlines the major tasks for policymakers and explains how the European Central Bank (ECB) should deal with the sharp rise in inflation. Wieland sees inflation declining in 2022 and 2023 compared to the current year, but to a higher level than expected at the beginning of the year. "This is no reason to panic, but enough reason for caution and prudence."
Prudence also includes keeping in mind "that investors want to be compensated for inflation. Wieland believes that a clear exit strategy from the expansionary monetary policy is essential. In his view, the ECB should clearly signal how it will tighten monetary policy depending on developments. "It is better to launch a normalization strategy sooner than later".
Commenting on the upcoming federal election, Wieland said the next government should make it an economic policy priority to mobilize private investment and meet the challenges of climate change and digitization with innovations. Another important point he mentioned was longer working lives due to demographic change and Germany's role in Europe, "which means advocating fiscal rules so that liability and control for government action remain at the same level."
Börsen-Zeitung: "Höhere Steuern wären Gift fürs Wachstum" (€)