Slowly but surely, asset price inflation is returning in Germany. Declining consumer price inflation and falling interest rates have made this possible.

The decline in interest rates on long-term German government bonds since 1989 is largely due to the FOMC meetings of the Fed. The ECB has almost no influence on long-term interest rates.

The slump in asset prices in Germany that has been observed for around two years has come to a standstill. This is due to developments on the interest rate markets.

DAX companies receive billions in subsidies from government agencies. It is questionable whether this public money generates added value for society. The data suggests that government money is replacing private investment.

Asset price inflation in Germany was -1.3% at the end of the first quarter of 2024. While prices fell in the middle of last year in the wake of interest rate hikes, they stabilized in the first quarter of 2024 due to possible interest rate cuts.

The turnaround in interest rates led to falling asset prices in the northern countries of the eurozone in mid-2023. In the southern countries, a catch-up effect led to asset prices rising despite rising interest rates.