The European Central Bank (ECB) is about to have an exciting meeting: This Thursday, the ECB Council, the supreme monetary policy body, wants to decide on the further course - and this with record inflation since the introduction of the euro.

Commerzbank believes it is possible that the central bank will already significantly increase the banks' allowances for negative interest rates - but it will be more exciting to see whether it will say when it wants to abolish negative interest rates.

The economist Lars Feld had suggested that the central bank could announce at this meeting that it would do just that in the fall.

Christian Siedenbiedel

Editor in Business.

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After all, inflation keeps rising.

In the euro zone it had already reached 7.5 percent in March;

in Germany at 7.3 percent according to the national calculation method, at 7.6 percent according to the European method.

The Federal Statistical Office confirmed a corresponding initial estimate on Tuesday.

Rising energy and food prices as a result of the war in Ukraine made life in Germany more expensive in March than it has been in more than 40 years.

Inflation is thus moving further and further away from the value of two percent, which the ECB sees as ideal for the economy in the medium term.

A rapid return to this target level is not in sight, on the contrary: German wholesalers raised their prices at record speed in March after the Russian invasion of the Ukraine because many raw materials and intermediate products cost significantly more.

They rose by an average of 22.6 percent compared to the same month last year.

There has not been a greater increase since the calculations began in 1962.

The development is considered an indicator of future inflationary tendencies, since wholesalers are the link between manufacturers and end customers, and higher costs usually end up with consumers.

Disrupted supply chains, such as those caused by corona outbreaks in China, also make many goods more expensive.

Because of higher costs, more companies than ever before want to raise their prices in the next three months,

as determined by the Munich Ifo Institute in its survey.

The economists are expecting an average inflation rate of 6.1 percent for 2022 and also think double-digit values ​​are possible in the next few months if there is a supply stop for Russian energy.

When will the first rate hike come?

However, the ECB is still struggling over the timing of the first interest rate hike: In the ECB Council, the “hawks”, i.e. the representatives of a tighter monetary policy, are campaigning for an end to the net purchases of bonds in July or even in June and for interest rate hikes from September on.

Robert Holzmann from Austria, Joachim Nagel from Germany, Madis Müller from Estonia, Pierre Wunsch from Belgium and Klaas Knot from the Netherlands, for example, spoke in this direction.

But more moderate Council members such as Slovenian Bostjan Vasle and Slovakian Peter Kazimir also spoke out in favor of an end to negative interest rates for the full year.

"The most detailed justification for continuing monetary policy normalization was provided by ECB Executive Board member Schnabel in a keynote speech at the beginning of April," reports Michael Schubert, ECB specialist at Commerzbank.

Among other things, Schnabel argued that the inflation risks were due to the increasing price pressure in the preliminary stages.

In addition, it is "much more likely" in the euro area that wages will be delayed, but will also react to both the increase in inflation and a tight labor market for a longer period of time.

Even ECB chief economist Philip Lane and Greek central bank president Giannis Stournaras, who clearly belonged to the deaf camp on the Council, did not want to rule out a rate hike before the end of the year.