Most economists currently put growth in German production potential at 1 to 1.5 %. This is consistent with its average economic growth of 1.3 % in the period 1995 to 2005. Is there a chance of quickly reverting to a permanently higher growth path? We believe so.

It is estimated that by the end of 2005 households' holdings of financial assets had swelled to EUR 4.32 trillion. The positive stock market trend played a large part in the more than 6 % increase.

Due not least to soaring oil prices, prices and interest rates are rising around the globe. Nonetheless, long-term bond yields remain low. Will the rise in interest rates continue and what are the possible explanations?

Following the extremely expansive stance of monetary policy in recent years, monetary growth has got well ahead of economic activity, giving rise to substantial excess supply. As long as external factors such as globalization curb the rise in unit labor costs, there are justified grounds to hope that this will not fuel inflationary trends. However, even if the euro area economy were to slow further, we do not see any further scope for a rate cut.