D.he markets are almost past what the world still has to get used to. Corona has now become a side note or, as analysts would say, priced in. Nobody there really looks at the number of infections anymore. But other numbers are coming more and more into focus, not to say they are the only topic. Now it’s all about inflation.
Inflation in Germany rose to 3.9 percent in August. Consumers notice that in their wallets that some products are more expensive than they are actually used to. But what are the stockbrokers afraid of? Because the central banks and the vast majority of economists still assume that the current increases are only temporary and represent a catch-up effect from the previous Corona year. But what if not? If, on the other hand, inflation turns out to be permanent, the central banks must intervene and tighten monetary policy. Interest rates could then rise again. This is not a problem as long as it is below economic growth or inflation.
The European Central Bank gave some pointers this week as to what to do next – it presented its monetary policy decisions on Thursday. As expected, the key rate was left at 0.0 percent. The ECB is also further reducing the pace of its securities purchases, but it still left open how strong the throttling will be. The PEPP pandemic emergency program should therefore be continued until at least the end of March 2022. The decision for this was unanimous, but it does not yet constitute a decision in principle, said ECB President Christine Lagarde.
In the end, investors really didn’t know what to do with this information this week. As a result, the German share index Dax remained undecided this week and fell around 0.7 percent to around 15,670 points.
There are no earth-shattering economic data on the agenda for the coming week. However, consumer prices in the United States are expected on Tuesday at 5.3 percent. In addition, retail sales in the United States are on the table. Investors are trying to read from this data when the Fed will tighten its monetary policy reins – its deliberations are due on September 22nd. It could be uncomfortable because of the so-called Witches’ Sabbath on Friday.