In an interview with the Financial Times, Bundesbank President Joachim Nagel called for a further increase in euro area interest rates, saying, “if we are to tame this stubborn inflation, we will have to be even more stubborn”. Our fight against inflation isn’t over yet, he noted, while stressing that interest rates are approaching restrictive territory. 

The Bank for International Settlements (BIS), the European Central Bank, the Deutsche Bundesbank and the Banque de France have opened the BIS Innovation Hub Eurosystem Centre next week in Frankfurt am Main and Paris. The ceremony was streamed live on Tuesday, 28 March 2023. Speakers included Agustín Carstens, General Manager of the BIS; Christine Lagarde, President of the ECB; François Villeroy de Galhau, Governor of the Banque de France; and Joachim Nagel, President of the Deutsche Bundesbank. 

The Bundesbank expects economic output in Germany to decline again in the first quarter of 2023. Although output in industry and construction expanded significantly again in January, exports of goods recovered only partially in price-adjusted terms. In addition, consumer-related sectors continue to suffer from the persistently high level of inflation. Core inflation once again matched the all-time high of December 2022. Despite the current weak economy, the outlook for the labour market remains positive.

Is digitalisation increasing aggregate labour productivity? And if so, to what extent? The Bundesbank’s experts explore these questions in the current issue of the Monthly Report by studying developments in the four largest euro area countries and the United States between 1997 and 2018. They find that productivity effects emanating from the digital sectors are very strong, with input-output linkages between economic sectors playing an important role.