Should inflation in the euro zone remain very high well into the new year, the European Central Bank (ECB) could be induced to act on interest rate policy. That’s what Erste Group CFO Stefan Dörfler said on Thursday at the profit fair in Vienna. “Should the inflation of three or four percent stay sustained in the direction of March or April, I am convinced that the ECB will get into an issue with its key interest rate of minus 0.5 percent” regarding the bank deposit rate.
The fact is that all banks have a level of liquidity that simply cannot be placed – even with high credit demand. When asked where monetary policy could go, Dörfler referred to countries in the CEE region. The Czech central bank has already increased interest rates and will continue to do so. The fact that the ECB does not want to react for a very long time may “not work out” if inflation continues to be high.
They were the first to be able to put much of the non-interest-bearing money in current accounts or savings books into long-term investments. There is “a constant inflow” of fund products in which you can get fully involved from as little as 50 euros per month. For housing loans, there has been a reasonable change from variable to fixed interest rates in the last two or three years. The challenge of giving more people access to affordable housing despite the rise in real estate prices also requires the necessary political framework. In any case, it is not possible to make everyone into apartment or house owners.
Erste Group does not register higher loan defaults, as has been variously predicted for the time the corona crisis was subsiding. “So far, there have been no failures,” said Dörfler. Rather, you have to explain to the auditors again and again why you have increased the credit provisions because of Corona, “you don’t have any defaults”. The often feared “cliff effect” of delayed failures “will not exist” either.
In terms of the economy, however, the strong rebound is undoubtedly entering the next phase. In China, the economy grew significantly weaker in the third quarter than in the first and second. The question is whether this will be reflected in the global economy. With the right support measures, the euro zone and Austria would be able to take a leading position in the crisis. The convergence of Eastern Europe towards Western Europe will also continue in terms of gross domestic product per capita. Those are the relative parameters – you will absolutely have to see how inflation and interest rates develop into 2022.
After the IT problems at the first on Tuesday last week with the ten-hour long downtime of the online banking platform “George” – as well as problems with card payments and cash withdrawals at the machine – one wants to “do everything possible to prevent this from happening again “, assured Dörfler, although there could not be an absolute guarantee:” The problem has been recognized and will be cleared away. ” The central systems in Austria were down for ten hours, that was ten hours too long. The reason was the failure of a very central network component, whereby the back-up logics did not work.