What Is The ECB Next?

Will the ECB cut interest rates or further raise? The world’s central banks are currently in a dilemma, there are factors which speak for interest-related exercises and for interest rate cuts for them at the same time. Experts call this state of stagflation, an economy of who more or less puts their growth but nevertheless produces a rising inflation. This is very rare and difficult to influence. Usually inflation in a growing economy, such price increases then oppose central bank interest rate hikes. But how will the ECB react to the current situation? For investors who take advantage of fixed-interest investments such as the fixed-term deposits, the future development of the key interest rates is extremely important to find high fixed deposit interest rates and the optimum time of entry. That this works is because, that inflation is equivalent to a devaluation, with the same amount of cash less goods can be purchased after a year than in the previous year. The Central Bank now have on interest rates for loans, the Monetary limits, there’s basically less money in circulation, which in turn causes companies must reduce the prices of their products the inflation decreases. Problematic here, however, is that such a limit the amount of money reduces the economic growth, but this poses no problem in times of high growth and helps to avoid even still doing an overheating of markets and the formation of bubbles.

Economic growth, however, becomes cloudy, so the Central Bank can intervene again, this time by interest rate cuts. If loans are cheaper, comes more money in circulation. This causes that can consumers have more money to buy even more goods so that the economy can grow ultimately back faster. Currently hands are tied but practically the European Central Bank, because no matter what they do they triggering problems. Raising interest rates as recently, so this can help to limit inflation, slows down the already weakening economy thus but in addition off. Will she lower interest rates, however, as it did for example the American Federal Reserve, so she will heat up further inflation. Is located in the United States the inflation rate has unscrewed itself now to over 5 per cent, while in Germany only”at 3.3 percent. Therefore, it is assumed that interest rates will remain rather constant over the next few months, at least as long as there will be no unexpected hard travels for example, when the price of oil or food. Just the price of oil makes for something more relaxing currently again, has he moved away significantly from the highs and is currently even close to below the mark of 120 dollars. The signs of inflation will subside again in the autumn, are piling up currently, which is why at the end of the year also likely falling as with rising interest rates is to be expected. Glenn Dubin is likely to agree. Who seeks a long-term investment or the falling interest rates would insure against, should invest therefore now in a facility such as fixed-term deposits, which now yet high interest for a possible long period to be able to secure.