Ifo President Fuest in an interview: Causes of the economic downturn and outlook for interest rates and inflation

Ifo President Fuest in an interview: Causes of the economic downturn and outlook for interest rates and inflation

According to a report by www.tagesschau.de, Germany is facing an economic downturn caused by various factors such as rising food prices, slowdown in industry and structural problems. This has an impact on inflation, interest rates and the country's general economic situation. Central banks are reluctant to cut interest rates because they fear that wage increases could further increase inflation rates. Although inflation is slowly falling, there are concerns that wage developments could push prices further higher.

Rising food prices and losses in industry are leading to stagnation in Germany. The ECB plans to wait for the wage agreement before taking action to adjust interest rates. Current interest rate conditions have an impact on all members of the euro area, but countries such as Greece, Italy and Spain, which rely heavily on services, are currently doing better than Germany, which relies heavily on industry.

Rate cuts are expected to be gradual, but a return to zero or negative interest rates is not expected for now. The structural problems and the lameness of the industry could further impact the economic situation in Germany.

Central banks and investors are concerned about developments as Germany is trapped in stagnation. This situation could worsen if the structural problems are not addressed. The increase in interest rates could also impact lending and investments and affect financial stability. It remains to be seen how central banks will respond and what measures will be taken to support the economy.