German economic output is expected to rise again slightly in the second quarter of 2023, the Bundesbank writes in the May edition of its Monthly Report. Inflation, which is now broad-based and rather persistent, is increasingly leaving its mark on wage rises. There is much to suggest that firms will pass on part of the increased wage costs through their prices as the year progresses.

Congratulations! The European Central Bank (ECB) is celebrating its 25th anniversary. It has now been the single monetary authority for the euro area for a quarter of a century. Following the Bundesbank’s model, the ECB is politically independent and pursues price stability as its primary objective.

The Bundesbank’s Spring Conference 2023 – Climate Change and Central Banks has been place on 11 and 12 May. President Joachim Nagel’s video message, the welcome speech by Executive Board member Sabine Mauderer and the Keynote speech by Geoffrey Heal are available here.

Bundesbank President Joachim Nagel believes that the ECB should continue to raise interest rates given persistent high levels of inflation. “The fight against high inflation hasn’t been won yet. I could also have imagined an interest rate step of half a percentage point. But we have already announced further interest rate moves,” Mr Nagel said in an interview with the “Frankfurter Allgemeine Zeitung” newspaper. In addition, the ECB’s balance sheet is to be run down at a faster pace than hitherto as of July.