The price of gas on the Amsterdam Stock Exchange has fallen by ten percent in recent days. There has also been a decrease in gas prices internationally. For example, the British price of gas has fallen by more than three percent. The falling prices are in stark contrast to last summer’s gas prices. In August 2022, the price of gas peaked at over three hundred euros per megawatt hour.
Germany in recession
Not only have gas prices fallen, but the German economy has also contracted further earlier this year. According to an estimate by the national statistics office, the economy in Germany contracted by 0.3% this quarter. Germany has officially entered a recession. ING Germany’s chief economist Carsten Brzeski has already seen the recession as a dark cloud hanging over the German economy. “Last summer, many economists already said that it was inevitable that the German economy would go into recession.”
For savers, the sky is slowly clearing. ING customers can receive 1% savings interest starting next month. In doing so, ING follows the lead of rival Rabobank, which announced last week that interest on savings would be raised to 1%. At ING, savings interest will soon only apply to a savings balance up to and including €10,000. For higher amounts, the interest will be 0.9 per cent on credits up to and including one million euro. Savings interest rates at major banks remain relatively modest despite hikes, with smaller banks luring savers with interest rates above two percent.
The IMF admits it was wrong
The International Monetary Fund (IMF) also released interest rate news last week. The IMF admits that keeping interest rates at zero per cent for ten years was the wrong choice. According to macroeconomist Edin Mujagic, it was a good move because it avoided a lot of trouble, “but there is always a price in the end.” Now the IMF sees it too. According to Mujagic, the IMF’s monetary policy has created bubbles in financial markets, increasing the likelihood of a financial crisis in the future. ‘Maintaining the same interest rates for ten years remains a mistake’, concludes the macroeconomist.
The European Central Bank (ECB), on the other hand, has been raising interest rates for some time. To further curb inflation, ECB policymaker Pablo Hernández de Cos argues that the ECB should raise its interest rates further. De Cos – who is also president of Spain’s central bank – says the monetary tightening process is well advanced, but that the ECB still has a long way to go. Since last year, the ECB has been trying to bring inflation back to the desired level by raising interest rates. However, inflation is still well above the central bank’s medium-term target of 2%.