How do countries struggle with inflation


For more than a decade it was hardly an issue, since the beginning of the year it has been back in Germany: inflation. According to the method of calculating the harmonized consumer price index, Germany had an inflation rate of 1.6 percent in January 2021 - a significant increase compared to minus 0.7 percent in the previous month. This puts Germany, together with the Netherlands, in first place in the inflation table of the euro countries.

And that's just the beginning: This year prices in Germany could rise again as sharply as they have not for many years. Bundesbank President Jens Weidmann anticipates that the inflation rate in Germany could rise to over 3 percent by the end of the year. It is hardly surprising that in the course of this, the yields in the euro area also increased significantly; in February the 10-year euro swap rate returned to positive territory for the first time since March 2020.

Market interest rates are also rising in the USA. It is already being discussed there whether Joe Biden's anti-corona financial injections could overheat the economy and force the central bankers of the Fed to normalize their extremely loose monetary policy earlier than previously assumed. Are interest rates going up even further across the board, and what does that mean for CFOs and treasurers when it comes to raising capital, but also when investing liquid funds?

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