3 ms·
The energy cost might be the cause of that interest rate though.
by markus_zhang 3y ago
The energy cost might be the cause of that interest rate though.
- worksonmine 3y agoWhat correlation do you see to get to that conclusion?
- beambot 3y agoRates were raised to combat inflation.
- ccozan 3y agoNot from what I know. The high energy costs are due to a effective and possible felt scarcity which occured at the beginning of the war in Ucraine. The energy companies are now planing to reduce the costs with as much as 25% from next month, since the marked is now flooded with gas and renewables ( a lof of new wind parks and solar installation will go online the next month ). I honestly I do not know why the interest rates went up. If someone can explain the correlation with the energy price, please do.
- pjc50 3y agoEnergy price -> inflation -> central bank raises rates to cause recession [ -> reduced wage/price feedback loop -> reduced inflation ] The part in square brackets is yet to come.
- comicjk 3y agoThere is a correlation. Germany has the reputation of being very concerned with inflation, which happens when the amount of money in circulation grows relative to the supply of goods to buy. When there is a supply shock (such as this energy conflict), inflation is the natural result, but a concerned government can respond by increasing interest rates to reduce the amount of money in circulation. That way they get less inflation than they would have otherwise, at the cost of slowing down the economy.