The President of the German Federal Bank is in favor of further significant increases in interest rates.
(Photo: dpa)
Frankfurt From the point of view of Bundesbank President Joachim Nagel, the ECB must step up its efforts in the fight against the sustained surge in inflation, even after its most recent jumbo interest rate hike. There are definitely signs that inflation is now affecting many areas of the economy, Nagel said in an interview with Deutschlandfunk on Sunday. Therefore, it is now important to take action on the part of monetary policy. The move by the European Central Bank (ECB) on Thursday was a clear sign. “And as I said, if the inflation picture stays the same, further clear steps must follow,” said Nagel. “In the near future as well, of course,” he added.
According to Nagel, he assumes that price growth will accelerate and that inflation could peak at more than ten percent in December. For 2023, too, the annual rate of increase will probably be significantly too high at more than six percent, he said. The ECB is actually aiming for an inflation rate of two percent. “The core issue is that stable prices are ultimately much more important for medium-term, long-term growth and [einen] good economic outlook for the euro area.” A dry spell may have to be bridged.
The ECB braced itself against rampant inflation at its interest rate meeting on Thursday with the largest interest rate hike since the introduction of euro cash. The currency guardians around ECB boss Christine Lagarde decided to raise interest rates by an extraordinarily strong 0.75 percentage points. This is the second rate hike in a row. In July, the euro central bank initiated the turnaround in interest rates and raised key rates for the first time since 2011. The next ECB interest rate meeting is on October 27th.
More: “ECB rate hikes are overblown”
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