Mr. Born, the European Central Bank is raising interest rates by 0.75 percentage points, more than ever before in its history.

Is this the right decision?

Sarah Huemer

Editor in the "Value" department of the Frankfurter Allgemeine Sunday newspaper.

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We'll probably see that in a year or two.

Only then can one answer the questions: Was the central bank too late in raising interest rates?

Did she maybe even do too much too late?

But what is pretty certain is that inflation will remain higher in the long term than before Corona.

This is partly due to the fact that raw materials remain scarce.

The price increases are mainly due to the bottlenecks and high energy prices.

Can the ECB do anything about this inflation at all?

Not much directly, but of course there are indirect effects through the slowdown in economic activity.

I'm confident that the price hikes will subside.

A lot will take care of itself.

Freight rates have been very high for a long time, but they have fallen significantly again in the past few weeks, which is also affecting the prices of goods.

The whole issue of supply chains also depends heavily on China and how the lockdowns will continue there.

It almost sounds as if we don't need any further rate hikes at all.

No, that would be wrong.

It is important that the central banks tackle the current inflation in a decisive manner and thereby regain some of their lost credibility.

This is the only way to prevent consumers and producers from becoming entrenched in their expectations of much higher inflation in the long term.

Because these could then really start a longer-lasting inflation spiral, for example via wage demands.

The ECB is in quite a bind.

Higher interest rates should curb inflation.

But that could exacerbate the already looming economic downturn.

Of course, this dilemma has always existed.

By raising interest rates, a central bank slows down inflation, which is its main goal.

However, this carries the risk that it will stall the economy too much.

This is particularly difficult at the moment, it is an extraordinary phase.

The last time we had inflation rates this high was in the 1970s.

In a speech by the head of the US central bank, Jerome Powell, two weeks ago, it was clear that monetary policy is currently not concerned with an economic downturn, but with inflation.

The fear of an economic downturn is affecting many people, including on the stock markets.

How worried should investors really be?

The good news is: a lot is already included in the courses.

We know that gas is no longer coming from Russia, that companies are suffering and that interest rates are rising.

The stock markets have already reacted to this with significant losses.

Of course, the question arises as to how bad it can get.

I assume that the profits of many companies will continue to fall significantly.

In the past, however, by the time the economic downturn actually hit, the stock market was long past its bottom.

We are currently in the intermediate phase.

This will result in good opportunities for investors in the coming months.

What should investors buy?

Of course, it always depends on how much risk investors are willing to take.

Classic bonds are generally rather difficult at the moment.

Raw materials, on the other hand, can be worthwhile, as they are also needed in the long term for the energy transition or electromobility.

However, investors find the best opportunities in the stock market.

One example is the health sector: In Europe in particular, there are strong market leaders, for example in medical technology.

In addition, this sector is not so dependent on the economic situation.