The Deutsche Bundesbank expects prices to remain under high pressure.

The inflation rate is likely to “remain extraordinarily high,” the German central bank warned in its monthly report presented on Monday.

This is becoming apparent, although several special effects were eliminated at the turn of the year.

Economic growth is likely to have "slowed down somewhat" in the final quarter, according to the monthly report.

Christian Siedenbiedel

Editor in Business.

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Unlike the environmental organization Greenpeace, for example, the Bundesbank assumes that climate policy will tend to drive up prices, at least for a transitional period: Estimates that the current inflation rate is about half a percentage point of such "green inflation" are probably not entirely wrong.

In model studies, the central bank has also dealt with the question of how climate change and climate policy are likely to affect economic growth, but also on individual stocks.

She is now using a model called "EMuSe" ("Environmental Multi-Sector"), which can be used to analyze the effect of climate policy adjustment processes on the economy as a whole and individual sectors.

For the German gross domestic product (GDP), she comes to the conclusion that the GDP loss due to the physical consequences of climate change will initially be rather small, unlike in hotter regions of Europe, but could become significant in the future.

The Bundesbank also analyzed the consequences of a more consistent climate policy, which would achieve the Paris climate targets via a CO2 price, on the share prices of large corporations. 5,285 public companies from 75 countries were considered, which account for more than half of global stock market values ​​and are responsible for 17 to 20 percent of global greenhouse gas emissions.

The analysts come to the conclusion that 81 percent of all companies examined were spared from losses of more than four percent in stock market value due to emissions. However, losses of more than half of the company's value can be expected for at least seven percent of the companies. This primarily affects businesses that are geared towards fossil fuels. Climate-related changes in value are likely to play an important role on the financial markets in the future, write the Bundesbank experts. The coal, steel and cement industries, as well as airlines, were among the stock corporations that were severely affected by changes in value.

In its new strategy, the European Central Bank (ECB) decided that it and the national central banks should pay more attention to climate change.

The new President of the Bundesbank, Joachim Nagel, also announced in his inaugural speech that he wanted to do more in this area.

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