In view of the high inflation, there is resentment in the German economy about the monetary policy of the European Central Bank (ECB). "The ECB is not doing too little, it is doing the wrong thing," said the President of the Federal Association of Wholesale, Foreign Trade and Services (BGA), Dirk Jandura, in a survey of business associations published by the Reuters news agency on Monday. “The fact that it helps to stabilize state finances in times of crisis can be politically justified - but not in the long term.” In the long term, this endangers trust in the currency through the destruction of monetary value. A departure from this policy is therefore necessary.
At 5.2 percent, the rate of inflation is currently higher than it has been in almost 30 years. "We should take the current development seriously," said the President of the German Chamber of Commerce and Industry (DIHK), Peter Adrian, with a view to the price development. "What worries me in this regard: The ECB has not yet given any real signal to exit its loose monetary policy."
The digital association Bitkom sees a whole range of inflation drivers: rising raw material and energy prices, CO2 pricing, persistent delivery bottlenecks and excess demand for many goods and products.
"It is all the more important that the central banks do not add fuel to the fire through a sustained policy of super cheap money, but use the available instruments to counteract this," said Bitkom President Achim Berg.
Monetary policy as a price driver
The Central Association of German Crafts (ZDH) has a similar assessment. The overall rather loose monetary policy of the ECB would additionally feed and intensify these price increase effects. "So that the current price dynamics do not solidify in the long term, the ECB must immediately give the first signals in the direction of a more cautious monetary policy", according to the ZDH. In addition, the collective bargaining partners are responsible for ensuring that no wage-price spiral becomes entrenched - that is, prices and wages keep rocking upwards.
"The announced politically fixed minimum wage of twelve euros is unfortunately anything but expedient here," criticized the ZDH of the policy of the new traffic light coalition made up of the SPD, the Greens and the FDP. Bitkom President Berg also believes it is advisable to be moderate when it comes to funding policy. "So it makes no sense to spend huge sums of money on broadband funding if the capacity is lacking to block these additional funds," he said. "Too much money can be counterproductive here and only leads to a rise in prices for network expansion and then for mobile and broadband services." One billion euros per year to support network expansion in sparsely populated regions would be sufficient.
According to the BGA, politicians should also review their measures in terms of their price impact. "And above all by keeping the change in energy supply and mobility affordable and predictable for citizens and businesses," said BGA President Jandura.
In December, the Governing Council decided to end the bond purchases via the EUR 1.85 trillion emergency pandemic program PEPP from spring.
However, due repayments are to be reinvested at least until the end of 2024.
So that the financial markets do not sit on dry land after the PEPP acquisitions expire in April 2022, the ECB is also creating a flexible bridge via the smaller bond program called APP.
Its end, which is considered a prerequisite for a turnaround in interest rates, was deliberately left open by the monetary authorities.
ECB boss Christine Lagarde let it be known that the zero interest rate policy should be continued in 2022.