Munich, 16 December – Ifo President Hans-Werner Sinn has welcomed the interest rate increase by the US central bank. “It was high time for the increase. The zero interest policy pursued for years deprived the interest rate of its selection function, meaning that it could no longer be used to distinguish between profitable and unprofitable assets. That gave rise to the false assumption that resources are unlimited,” said Sinn. “Excessively low interest rates also lead to speculative bubbles that subsequently burst and can get banks into trouble. And when those bubbles burst the taxpayer usually has to come to the rescue,” he added. The same applies to the interest rate policy pursued by the European Central Bank.
Ifo Business Climate Index on Thursday, 17 December
Munich Seminar with Luc Laeven (European Central Bank) on 11 January
With best wishes