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Comment on Federal Reserve’s decision to raise interest rates

The Federal Reserve’s decision to raise interest rates was long overdue. The US economy is in a good state and more solid than the European one. I expect at least two more raises this year.

There is a significant risk that the US central bank will lift rates at too slow a pace, which would increase the risks to financial stability.

The prospect of higher interest rates in the US puts the Europan Central Bank under pressure not to prematurely … [continue reading]

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Statement on the Election of Donald Trump as US President

I expect the German economy to withstand the challenges arising from a Trump presidency. German companies are competitive, flexible and well diversified globally. I don’t expect that Germany’s trade with the USA will suffer significantly. My main concern is the European economy, which is still mired in a deep economic and financial crisis. The US election makes it more urgent than ever to speed up reforms and give the European economy a growth stimulus. I expect the euro to appreciate [continue reading]

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Currency and Financial Markets ECB Europe Macroeconomics Monetary Policy uncategorized

Supplement: Statement on the result of the Brexit referendum

An important aspect, that has been widely ignored in the debate about the consequences of a Brexit, is the impact on ECB monetary policy. Lower oil prices and a weaker economy in the euro zone and in Germany are likely to increase deflationary pressures further. As a consequence, the ECB is likely to extend its expansionary monetary policy path further into the future. The Brexit will most likely imply a longer period of zero interest rates for the euro area.… [continue reading]

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