<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>After ten consecutive increases in the prime rate by the European Central Bank’s (ECB), the question arises: What significance do these measures have, both indirectly for the interest rates increased at all value-added levels on the corporate side, and for households? While the prices for rents, being the largest component, are factored into inflation calculations, the dramatically increased interest rates for real estate loans – specifically for owner-occupied housing – are not considered at all. In this article, an extension of the calculation scheme is demonstrated to make transparent the direct effect of the prime rate increase on real estate owners’ expenses.</p>
</abstract>

After ten consecutive increases in the prime rate by the European Central Bank’s (ECB), the question arises: What significance do these measures have, both indirectly for the interest rates increased at all value-added levels on the corporate side, and for households? While the prices for rents, being the largest component, are factored into inflation calculations, the dramatically increased interest rates for real estate loans – specifically for owner-occupied housing – are not considered at all. In this article, an extension of the calculation scheme is demonstrated to make transparent the direct effect of the prime rate increase on real estate owners’ expenses.

The Calculation of Inflation: The ECB’s Monetary Policy is not Statistically Captured as an Inflation Driver

Wirtschaftsdienst

This work is licensed under the Creative Commons Attribution 4.0 International License.

Inflationsberechnung: Zinspolitik der EZB wird als Inflationstreiber statistisch nicht erfasst

After ten consecutive increases in the prime rate by the European Central Bank’s (ECB), the question arises: What significance do these measures have, both...

The Calculation of Inflation: The ECB’s Monetary Policy is not Statistically Captured as an Inflation Driver

Published Online: Mar 22, 2024

Page range: 211 - 214

DOI: https://doi.org/10.2478/wd-2024-0056

© 2024 Johannes Schwanitz, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.