The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program.
Villeroy de Galhau: ECB key interest rate could be 2% at the end of 2022
According to ECB Council member Francois Villeroy de Galhau, the European Central Bank could have completed the normalization of its key interest rates by the end of the year. Whether they their monetary policy has to tighten beyond that is not yet certain, he says. “I think the estimate (for the neutral interest rate R*) for the euro area is under or close to 2 percent in nominal terms. We could get there by the end of this year,” said Villeroy de Galhau in a speech at the International Monetary Fund (IMF ). The ECB must proceed “in a determined but orderly manner”.
Scholz: No German going it alone in supplying arms to Ukraine
Chancellor Olaf Scholz (SPD) is sticking to his position on the issue of supplying battle tanks to Ukraine, although the US embassy in Berlin recently left it up to all allies to decide on the type of aid to Ukraine for each country. Scholz stated that there would be no German going it alone. So far, Scholz has not complied with the Ukrainian request for the delivery of battle tanks and armored personnel carriers.
As expected, US producer prices fell slightly in August
Inflationary pressures at the US producer level eased in August. According to the Ministry of Labour, producer prices fell by 0.1 percent compared to the previous month and were 8.7 (July: 9.8) percent above the level of the same month last year. Economists had forecast a monthly price decline of 0.1 percent. Core producer prices rose by 0.4 percent on a monthly basis and by 6.2 (5.8) percent on a yearly basis. A monthly rate of 0.3 percent was expected.
Lane: Big ECB rate hike was appropriate – energy drives inflation
ECB chief economist Philip Lane has defended the European Central Bank’s (ECB) interest rate hike by 75 basis points, but at the same time pointed out the dominant role played by energy prices in the very high rate of inflation. “Inflation is expected to be well above target over a long forecast horizon, net risks to inflation are on the upside and policy rates are still very accommodative. So taking a big step was appropriate,” Lane said a meeting of the ECB’s money market contact group, according to published text.
ADAC: Prices at the pumps have fallen slightly
The prices at the petrol pumps have fallen again since last week: A liter of Super E10 currently costs 1.945 euros per liter nationwide on average, 4.7 cents less than in the previous week, as the ADAC in Munich announced on Wednesday. Diesel became cheaper by 4.0 cents and is 2.117 euros.
Lindner: Cabinet initiates inflation compensation law and other laws
The Federal Cabinet has launched a series of draft laws by Federal Finance Minister Christian Lindner (FDP) to implement the agreements of the coalition committee for a relief package. In detail, the cabinet passed drafts for the Inflation Compensation Act, for a temporary reduction in the sales tax rate on gas deliveries and for the annual tax law, as well as a draft for a change in the law to support energy companies through the KfW development bank, as Lindner announced at a press conference.
IG Metall is demanding massive improvements to the planned relief
IG Metall has warned of a severe loss of purchasing power and is therefore calling for improvements to be made to the federal government’s planned relief. “If a recession is imminent, it will be mainly because of the massive deterioration in the consumer climate,” said IG Metall boss Jörg Hofmann of the Augsburger Allgemeine. “We expect significant tightening of a number of points in the relief package.”
Federal Ministry of Economics: Want successful talks with Uniper
The Federal Ministry of Economics does not want to comment on ongoing talks about help for the ailing supplier Uniper so as not to jeopardize the rescue of Germany’s largest gas importer. A ministry spokeswoman only confirmed that efforts were being made to find a solution for the ailing company.
Finnish parliament approves rescue package for energy companies
The Finnish parliament has approved aid for the energy sector amounting to 10 billion euros. The package consists of loans and financial guarantees and is intended to help stabilize the market in the face of the turmoil caused by the Ukraine war. The government in Helsinki announced the measures to be taken as part of the gas delivery stop through the Nord Stream pipeline, which put a further strain on the European market. The Fortum Group, parent company of the German energy company Uniper, also receives support from the Finnish state.
French gas network operator expands export opportunities to Germany
The French gas network operator GRTgaz is expanding its export capacities to Germany. These should be available in mid-October, GRTgaz announced in Paris on Wednesday. The gas network operator also warned that in the event of a very cold winter, gas could also become scarce in France. Under such circumstances, up to 16 terawatt hours could be missing, which corresponds to about 5 percent of the usual amount consumed in winter.
Federal government plans to tighten sanctions – newspaper
According to a newspaper report, the federal government wants to significantly tighten the law on sanctions. According to the Süddeutsche Zeitung, the traffic light coalition is planning, among other things, a new central office for sanctions enforcement, which will be responsible for enforcing and monitoring sanctions law in parallel with the Bundesbank and the Federal Office of Economics and Export Control. Data from the approximately 400 German land registers should therefore be brought together centrally in the transparency register.
Habeck: Ukraine and one-sided dependencies topic at the G7 meeting
Before the meeting of the G7 trade ministers in Brandenburg, Federal Minister of Economics Robert Habeck (Greens) emphasized the continued importance of unity and solidarity on the part of the seven leading democratic industrialized countries (G7) for Ukraine. The Russian war of aggression made it clear once again how much the G7 had to overcome one-sided dependencies. This will be a key issue at the meeting, Habeck said.
Scholz travels to the UN General Assembly in New York on Monday
Federal Chancellor Olaf Scholz will travel to the United Nations (UN) General Assembly in New York on Monday and give a speech there. Government spokesman Steffen Hebestreit explained that Scholz will also meet high-ranking representatives from other countries at the UN General Assembly to discuss current global challenges, food security and climate change.
EU Commission wants to ban products made from forced labor
The EU Commission wants to ban products made from forced labor. The ban is intended to “affect domestic, imported and exported products,” according to a proposed regulation published on Wednesday. Among other things, the EU is targeting China: Western states and human rights organizations accuse the People’s Republic of exploiting the Muslim Uyghur minority. EU Vice-President Valdis Dombrovskis said Brussels was taking the draft law against “modern slavery”. The planned ban also targets products made from child labor.
European Parliament votes for minimum wage standards
The European Parliament has spoken out in favor of common standards for minimum wages. The majority of MEPs voted in Strasbourg on Wednesday to consider minimum wages fair if they reflect 50 percent of the average gross income. At the beginning of June, representatives of the EU Parliament and the member states agreed on the common standards for minimum wages.
Collective bargaining agreements may provide for longer periods of temporary work
The parties to the collective bargaining agreement may also increase the maximum leasing period for temporary workers to 48 months. This is compatible with the law and constitutional, as the Federal Labor Court (BAG) in Erfurt decided on Wednesday. Such an extension of temporary work also applies to employees who are not members of the union concerned. (Az: 4 AZR 83/21)
France limits price increases for electricity and gas to a maximum of 15% in 2023
In view of the worsening energy crisis, France wants to limit price increases for gas and electricity to a maximum of 15 percent at the beginning of 2023. This corresponds to an increase of 20 to 25 euros in monthly heating costs, Prime Minister Elisabeth Borne said in Paris on Wednesday. Without the cap, the monthly costs would increase by up to 200 euros per month.
Retail Sales July -0.8% MoM; -5.2% yoy
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(END) Dow Jones Newswires
September 14, 2022 13:00 ET (17:00 GMT)