High inflation threatens to become a “cleft”.
The head of Deutsche Bank and chairman of the Association of German Banks warns of the social impact of persistently high inflation.
(Photo: Bloomberg)
Frankfurt The extremely high inflation poses according to bank president Christian Sewing considerable potential for social conflict. “High inflation rates and negative real interest rates are a rift for society,” he said Deutsche Bank boss in his function as President of the Association of German Banks (BdB) in an interview with the German Press Agency. The rate of inflation must “be brought down as quickly as possible”.
Strong price increases for energy and food had the inflation rate in Germany to 7.9 percent in May, the highest level in almost 50 years. The Federal Statistical Office intends to publish the first estimate for the month of June this Wednesday (29 June).
“There’s a lot to suggest we could see inflation peak in the fall,” Sewing said. “But in principle, inflation will be with us for a longer time and will not disappear in the next twelve months, despite the interest rate measures that have now been announced.”
the European Central Bank (ECB)which is aiming for stable prices in the euro area in the medium term with an annual inflation rate of two percent, intends to raise the key interest rates in the euro area by 0.25 percentage points at its next regular meeting on July 21.
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This is the right signal, Sewing said. “I have always said that I would have liked such a rate hike a little earlier, but now we are on the right track and now we should ECB support in maintaining this policy.”
Bank customers can at least hope for an end to negative interest on the account. “Of course, the industry will also adjust its conditions again if the ECB no longer charges negative deposit rates,” said Sewing.
When asked why the industry was not already abolishing the so-called custody fees, which many bank customers perceive as penalty interest, in a concerted campaign, Sewing said that each institute had to decide for itself on specific conditions. The BdB President emphasized: “We have seen negative interest rates for years, and in most of these years the negative interest rates were not passed on to private customers on a large scale. That’s why you shouldn’t blame the banks for the buck.”
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