Banker's beef

Between Principles and Pragmatism

steingart-weidmann-verlagsgruppe passau
Gabor Steingart and Jens Weidmann have plenty to talk about.
  • Why it matters

    Why it matters

    Low interest rates are necessary to revive Europe’s economy, but they’re a problem for Germans worried about having enough income in retirement.

  • Facts

    Facts

    • The Bundesbank expects inflation to remain significantly below the ECB’s targeted rate of 2 percent.
    • The European Central Bank reduced its benchmark interest rate in September to a record low of 0.05 percent.
    • Mr. Weidmann said he was optimistic for 2015 and believed that the economic recovery would continue.
  • Audio

    Audio

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For many years now, Germans have suffered from historically low interest rates that have reduced the purchasing power of their savings. While much of the struggling euro zone is still looking to the European Central Bank for additional help to revive their economies, Germans are keen to know when interest rates might finally go up.

Jens Weidmann, president of Germany’s central bank, the Bundesbank, offered little hope of such a shift in an exchange of views with Handelsblatt publisher Gabor Steingart at the “People in Europe” event hosted by the Passau Publishing Group.

Citing the Bundesbank’s projections that the euro zone’s inflation rate will likely remain significantly below the ECB’s targeted rate of 2 percent, Mr. Weidmann said the current situation was “not exactly the right ingredient for a reversal in the monetary policy course.”

One attendee questioned how Germans can be expected to save enough money to last through retirement, given the low interest-rate environment. Mr. Weidmann offered no specific investment tips but some general advice: Buy only what you understand and be wary of promises of high returns.

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