Soaring prices fuel anti-ECB sentiment in Germany


As inflation hits its highest level in three decades in Germany, Simon and Lena Wendland, parents of newborn twins, say their lives have become more uncertain.

Their electricity supplier has just announced that it is doubling its electricity prices, while real estate prices are shaping up to be “rather scary”.

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“We don’t know where this will take us,” Simon Wendland told AFP.

From energy to food, paper and rent, prices have gone up mercilessly in Germany and across Europe. The latest data puts inflation in Europe’s largest economy at 5% year-on-year, a level not seen in the past 30 years.

Bild, the country’s best-selling newspaper, accuses the European Central Bank of failing to control prices and even compounding the problem with its cheap money policy.

The Frankfurt-based ECB has argued that its record interest rates and pandemic emergency bond purchase program of € 1.85 trillion ($ 2.15 trillion) are needed to support an economy ravaged by the coronavirus crisis.

In Germany, on the other hand, savers believe that the ECB’s zero rate policy is eating away at the value of their assets.

Bild recently called ECB chief Christine Lagarde “Madam Inflation”, saying she “wears Chanel clothes” but “doesn’t care about retirees, employees and savers”, even though the bank’s president Central itself has expressed concern about the rising prices of basic foodstuffs. in supermarkets.

With its ultra-accommodating monetary policy in recent years, the ECB has long been a bogeyman for German savers.

Bild had nicknamed Lagarde’s predecessor Mario Draghi “Draghila”, comparing him to a vampire “sucking our accounts to the last drop”.

After the ravages of the inflationary crises of the 1920s and 1970s, Germans have an innate fear of inflation, said ING economist Carsten Brzeski.

Lagarde’s repeated claim that recent price spikes are transient sparks disbelief in Europe’s most populous country.

“According to Ms Lagarde, we will be over all of that by the middle of next year, but that’s what she says,” said Marlott Kroeber, a 72-year-old former teacher.

German bankers have also expressed skepticism about Lagarde’s valuation.

“There are more and more indications that this price spike is not temporary and we will have to live with it beyond this year,” said Manfred Knof, head of Commerzbank.

Christian Sewing, his counterpart at Deutsche Bank, also urged central banks to “find a way out of their very accommodative monetary policy”, and the “sooner the better”.

Germany’s central bank chief Jens Weidmann recently threw a bombshell by announcing his resignation from the mighty Bundesbank at the end of this year.

Weidmann, who led the Bundesbank for a decade, has often been seen as a single voice against the ECB’s ultra-lax policies.

So with his departure, “the last defender of the German saver has given up,” the Die Welt newspaper said in a tribute to the central banker.

Nonetheless, analysts argue that the ECB has safeguarded the prosperity of the eurozone with its policies.

Critics forget “that the institution has also ensured that the economy continues to be supported, that the euro area is maintained and that the German labor market is experiencing a boom” unprecedented for 20 years, said Brzeski.

Employees were also able to benefit from a strong economy while the State was able to contract loans at negative rates.

Some consumers are therefore still in the ECB’s camp.

Retired Hermann Vogt, for his part, believes that the central bank “does above all what is necessary” in the interest of the 19-nation zone.

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