Price pressure in Germany remains constant. The inflation rate was 2.2 percent in April, as the Federal Statistical Office announced in a preliminary estimate on Monday.
This means that the downward trend of the last few months has stopped. In March the inflation rate in Germany was already 2.2. There are also increasing signs in the rest of Europe and the USA that the battle against inflation has not yet been won. ECB Director Isabel Schnabel warned in a speech that “we could be facing a pretty bumpy last mile.” She pointed to high wage growth, which could fuel a renewed price surge. The unemployment rate in the euro zone is at its lowest level in history. This strengthens the unions’ negotiating position for wages and salaries – despite the weak economic situation in Europe.
Inflation in the euro zone was 2.4 percent in March – the central bank’s target is exactly two percent. Until a few weeks ago, it was assumed that the ECB would start a cycle of interest rate cuts in June. The key interest rate is currently 4.5 percent. There are now doubts as to whether the monetary authorities will tighten monetary policy more than once in June.
In the USA, Federal Reserve Chairman Jerome Powell has already indicated that key interest rates could remain at record levels for longer than expected. Observers now expect a reduction in November at the earliest, and some are even speculating a further increase. Inflation in the USA climbed to 3.5 percent in March. Concerns about a return of price pressure are also growing in Switzerland, where the central bank has already lowered the key interest rate once. “There is great uncertainty, new global shocks can come at any time,” said the President of the Swiss Central Bank, Thomas Jordan.