The development of inflation rates in the coming months, "will of course depend on whether the war lasts longer or is extended and whether oil and gas prices rise even further and remain higher."
Germany should now urgently prepare for the risk of a supply freeze. A supply freeze, like an embargo of its own, would be bearable, he said. "However, due to its high dependence on Russian natural gas, oil and hard coal supplies, Germany would plunge into a deep recession." A so-called technical recession, i.e. two quarters of declining economic output, had already occurred this winter. For this year, the GCEE now expects economic growth of 1.8 percent. In December, the Council had still assumed growth of 4.6 percent.
According to the economic forecast, inflation of 3.4 percent is possible next year. "Our hope that inflation will come down next year depends very much on a reaction from the ECB," Wieland added. He added that the central bank did give itself the leeway in March to raise interest rates earlier than previously expected. "But I personally would be in favor of moving faster and raising rates quickly."
FAZ: Volker Wieland: "Jetzt kann man auch zweistellige Inflationsraten nicht ausschließen" (€)
Handelsblatt: Volker Wieland: "Es könnte deutlich schlimmer kommen" (€)