This all seems to be happening a bit sooner than was expected.
Good for German savers, not so good for heavily indebted Irish mortgage holders
Germans say time has come for higher interest rates
The ECB is now in a position to ‘normalise’ monetary policy, economists sayhttp://www.irishtimes.com/business/econ ... -1.2926401
German economists called on the European Central Bank on Thursday to raise interest rates after euro zone consumer prices rose faster than expected in December.
Inflation in the 19 countries sharing the euro increased an annual 1.1 percent last month, data showed on Wednesday, stirring a fear of inflation among German that goes back to the 1920s. The ECB aims for inflation of just under 2 per cent, but it has undershot its target for years. To fight off deflation, the central bank has cut interest rates to zero and pumped more than a trillion euros into the economy through a bond-buying programme.
“It is time for a normalisation (of monetary policy),” Stefan Bielmeier, the chief economist at DZ Bank, told the newspaper Bild.
“Now a change in interest rates is doable.”
DIW institute chief Marcel Fratzscher told Bild: “The sooner the inflation rate in Europe reaches the goal of 2 per cent, the quicker the ECB can raise interest rates. Savers would also benefit from this.”
Isabel Schnabel, one of the panel of economists that advises chancellor Angela Merkel’s government, said an end to ultra-expansive monetary policy should come soon, Bild reported....