Dr Friederike (Fritzi) Köhler-Geib has been KfW Chief Economist and head of the company's economics department since November 2019. She analyses trends relevant for KfW in the economy, society and on the financial markets and brings a new dynamic to the economic and financial policy debate. The focus of her work lies in the analyses of economic developments and growth trends in Germany. A particular focus is placed on small and medium-sized enterprises and the role of innovation and digitalisation in improving competitiveness, as well as issues related to the goal of a climate-neutral economy. Furthermore, Dr Fritzi Köhler-Geib also actively addresses economic policy connections between Germany, Europe and the world.
„In the USA, the inflation rate fell for the sixth month in a row in December. While this is a welcome development, the core inflation rate of 5.7% is still clearly too high and therefore the key interest rate was raised by 25 basis points to the new range of 4.5% to 4.75% at the February meeting. The renewed reduction in the interest rate step compared to the December meeting indicates that the Fed is slowly ushering in the end of the interest rate cycle. For the next few meetings this year, however, the Fed will be looking very closely at the still extremely tight labour market and the accompanying wage pressures. One or two more rate hikes therefore seem quite possible."
“At its meeting today, the ECB stayed the course it started last summer and raised key interest rates by another 50 basis points. While the monetary indicators for December show that the impact of rising interest rates is starting to be felt, the ECB has not yet made a move. Households and businesses have shifted their money mainly into longer-term deposits. With only a very subdued economic outlook, caution is also growing on the part of banks in lending; a slowdown in credit growth is to be expected. At the same time, the interpretation of inflation rates is difficult because many special effects are at work, especially government price brakes, and it is still unclear how these are accounted for. The reasons for price pressures are shifting away from energy prices and it is all the more important that the ECB keeps a close eye on the development of the core inflation rate. This has so far shown little sign of slowing. On the contrary, the strength of the labour market suggests that wage growth and services inflation will be more persistent and further interest rate moves will be needed at the upcoming Governing Council meetings.“
Russia’s war of aggression against Ukraine and the COVID-19 pandemic have shaken the foundations of a rules-based world order and the German economic model. Even amid the necessary short-term crisis management, investments are key to successful adaptation to the changed environment. They make restructuring energy supplies and the green and digital transformation possible – and demand a joint effort by government, the business community and private households. The lion’s share of necessary investment will have to come from the private sector. The current burdens from high energy costs and uncertainties act as additional roadblocks. So it is all the more important to encourage and provide intelligent support for private investment. Government therefore has a key role to play: first, by formulating targets and setting frameworks and incentives and second, by investing in infrastructure and human capital, both of which are required for the productive realisation of private-sector activity.
Rebuilding the economy after COVID-19 and tackling the climate crisis must go hand in hand. For Germany to achieve its target for climate action, it needs to tap into overlooked areas of potential to reduce its CO₂ emissions. In particular, this process will be essential for the transport sector. And there is even more that can be done with innovative building solutions.
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