There is a good tradition in the European Central Bank (ECB).

Once a year, the ECB Council does not meet in Frankfurt, but one of the 19 national central banks in the euro area invites the other members of the Council to their home country.

That was of course not possible during the pandemic, but last Thursday it finally worked again: They met in the "beautiful city of Amsterdam", as ECB President Christine Lagarde enthused.

And broke with another tradition without much ado.

Dennis Kremer

Editor in the “Value” section of the Frankfurter Allgemeine Sunday newspaper.

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Actually, such external meetings had always been characterized by the fact that the central bankers hardly made any important decisions there.

That was different this time: in Amsterdam, the ECB officially announced the long-awaited exit from its ultra-loose monetary policy, which many consider sorely necessary given the recent inflation rate of 8.1 percent in the euro area.

The central bank's controversial purchase program, through which the ECB recently bought government and corporate bonds worth 20 billion euros every month, ends this month.

Then the ECB will only replace expiring bonds from its portfolio with new paper.

Unfortunately, there is not much reason for optimism

There was a second decision: In July, the ECB will raise interest rates for the first time since 2011.

Unless something unforeseen happens, the deposit rate at which banks park money at the central bank, which is currently at minus 0.5 percent, should rise to minus 0.25 percent.

The other key interest rates are also to be increased by this percentage.

A second interest rate step is then to take place in September, possibly by as much as 0.5 percentage points.

For the first time since 2014, the key interest rates in the euro zone would be positive again.

Lagarde, who has been hesitant about dealing with inflation, underscored how serious the central bank is this time.

It's not about individual steps, you're "at the beginning of a journey".

And she was resolute: “Inflation is too high.

The turnaround in interest rates is finally here.

And it raises questions.

Will the new determination actually be enough to get inflation under control and otherwise cause no further damage?

Or can the fight against inflation ultimately only be won at the price of a recession?

So is the economy at risk of a crash?

These are questions that go beyond Europe.

Even in the United States, despite some differences, they end up being viewed quite similarly.

So much can already be revealed at this point: Unfortunately, there is no great reason for optimism.

Volker Wieland, finance professor at Frankfurt's Goethe University, has his doubts as to whether what the ECB has now undertaken is sufficient.

He says: "In my opinion, a more proactive policy, with an initial interest rate hike at the most recent meeting or the announcement that negative interest would have been abolished as early as July, would have made more sense." Negative interest was "completely out of date".

Klaus Adam, economics professor at the University of Mannheim, sounds similarly concerned: "I am skeptical as to whether the resolutions are already sufficient to bring inflation expectations under control."