Volker Wieland sees danger that relief packages could further accelerate inflation (Augsburger Allgemeine)

According to Prof. Volker Wieland, the government's relief packages could further accelerate inflation. The 200 billion euros provided by the German government would be equivalent to 5.6 percent of the gross domestic product in 2021. "If all states implement such measures, this will of course counteract the ECB's efforts to fight inflation," Wieland warned in an interview with the newspaper "Augsburger Allgemeine".

Regardless of the exact design of the gas price brake, he said, this will be a direct transfer to households in any case. "This will support inflation, you have to be aware of this effect." However, inflation is not solely due to the energy crisis, he said. An initial foundation was laid by the support programs during the Corona period, he said. "This was supported by the ECB because it bought government bonds on a large scale. It failed to change course earlier in 2021," Wieland said.After the recent interest rate hike, ECB chief Lagarde appealed to finance ministers in the euro area to make necessary aid measures for weaker groups temporary and targeted. The ECB's concern is that with overly generous aid, policymakers are both increasing sovereign debt and driving up inflation at the same time, according to the "Augsburger Allgemeine".

Augsburger Allgemeine: "Warum die EZB zunehmend in der Zwickmühle steckt"