Does anyone remember the time between 2014 and 2018 when Janet Yellen headed the world’s most powerful central bank, the American Fed? Or the years 2011 to 2019, when Mario Draghi was President of the European Central Bank (ECB). Those were great years.
Interest charges? Didn’t need to. securities? Bought by central banks wherever they could. risks? There were none. During this time, prices on the stock exchanges rose to unimagined heights, as did prices on the real estate market. At the same time, the economy grew and unemployment fell. Europe overcame the debt crisis. Politicians in the US and the eurozone were happy.
Warners, who called for a faster exit from the extremely loose monetary policy and pointed out the risk of inflation, were put off by the central bankers: If it came down to it, we would get the money out of the market again. If only it were that easy.
“I think I was wrong at the time about how inflation was going,” Yellen said now. A year ago she was convinced that inflation would not be a problem. Draghi, now Prime Minister of Italy, hasn’t even heard anything like that. And his successor, Christine Lagarde, didn’t want anything to do with the dangers of inflation for a long time.
But the disaster can no longer be ignored. The central bankers are being overwhelmed by the consequences of their policies like the sorcerer’s apprentice by the old master’s broom. In the euro zone, the inflation rate is eight percent. In the USA, prices even climbed by 8.3 percent. Anyone who simply refers to special effects caused by the pandemic or wildly fluctuating energy prices also refuses to take responsibility for their own actions.
Because right now, when the aftermath of the corona crisis and the consequences of the Russian war against Ukraine are fueling prices, it is becoming apparent that the central banks are no longer masters of events. Now it’s taking its revenge that there’s so much money in the market.
The ECB and the Fed can tighten their policies. But they are running out of time for interest rate hikes to take effect. Because when Moscow turns off the gas for its customers in Europe, there is no Russian oil and the industry trembles for its weal and woe, monetary policy is again faced with the question of whether this is a good moment to make lending more expensive. Or whether this will fuel another crisis.
How the ECB will then decide is foreseeable. Consumers should better prepare themselves permanently for more strongly rising prices.
“Everything on shares” is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.
