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Post: Weimers: “The situation is better than the atmosphere”


At Deutsche Börse AG’s New Year reception, ECB boss Lagarde made it clear: Interest rates will continue to rise to combat inflation. Politicians are also called upon to do this.

In the Frankfurt suburb of “Greater Eschborn”, which refuses to be united by the financial metropolis at all costs, Deutsche Börse AG’s headquarters have been allowing business tax revenues to flow for years – a win thanks to the low rates. Earn for the stock market Business.

And after a two-year epidemic hiatus, sparkling wine is now bubbling again, albeit weakened at a personal New Year’s reception, as long-time visitors explained to me. A new sign of humility in times of change?

Lagarde reveals long-standing high interest rates

Clearly and unequivocally, the New Year’s message from ECB President Christine Lagarde – in red velvet – as the foremost keynote speaker:

For interest rates to reach sufficiently restrictive levels, they must continue to rise significantly at a steady pace.

Christine Lagarde, President of the European Central Bank

And they’ll have to stay there as long as necessary, Lagarde continued.

ECB interest rate policy supports the course of the euro

Similarly, it was announced at Davos last week – economists are now expecting at least two further rate hikes, half a percent each, in early February and early March. At least, this expectation has been supporting the euro since the beginning of the year, which has now risen from the pair low to 1.08.

The common currency also benefits from declining interest rate dynamics in the US – with rising interest rates, investments in the Eurozone become more attractive again.

That’s good because energy is mostly billed in dollars. The strong dollar also contributed to rising prices in Europe. The euro is stable even after Lagarde’s speech.

Lagarde’s inflation target: Back to 2 percent

Inflation is very high in Europe, partly due to geopolitics and energy – but not only, he said.

We need to bring inflation down to our 2 percent target. And we will.

ECB President Christine Lagarde

While energy inflation has declined recently, core inflation, which excludes fluctuating energy, food, alcohol and tobacco prices, has been on the rise recently.

Frankfurt Stock Exchange fell to 16th place in the financial market ranking

While Lagarde talks more about opportunities and favorable deals, stock market boss Theodor Weimer then begins with the Scorpions rock ballad “Wind of Change”, pointing out the myriad of open wounds in Germany as a location: German companies eat as much as needed. Not for financial reasons, but because of the tough approval procedures, the backlog of reforms, and the snail’s pace in digitization.

This is also reflected in the decline of international investors’ trust in Germany. Frankfurt has fallen to 16th place in the world’s most important financial markets rankings, far behind South Korea, while Paris is still 11th. New York and London have rented the top two places – probably forever.

Stock market boss: Investors need uniform rules in Europe

Like Lagarde before him, he referred to the need to create a European capital markets union, recently called upon by the central bank governors of Germany and France. Public government budgets cannot afford the massive investments necessary to transform the economy.

However, international investors need uniform rules and open contacts in Europe. It is also concerned that Germany’s business model, which is based on the industry and represents the most valuable asset class, is in jeopardy. It is important to protect them.

Still, the stock market boss conceded that the situation was better than the mood. Therefore, in times of uncertainty, optimism is a must!

Stephanie Barrett is a writer in ZDF’s business division.

Source: ZDF

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