Under the motto “Backstage Bundesbank”, the central bank will provide information on its tasks and working methods at its Hesse headquarters on Saturday and Sunday
(Photo: Reuters)
Frankfurt From the point of view of Bundesbank President Joachim Nagel, the ECB is still a long way from the interest rate level with its tightening course, which will neither stimulate nor slow down the economy. “We’re still a long way from this neutral rate,” Nagel said on Saturday at the German central bank’s open day in Frankfurt.
It is important to him that interest rate hikes continue. “Something has to happen, something has to go up.” Under the motto “Backstage Bundesbank”, the central bank will provide information on its tasks and working methods at its Hesse headquarters on Saturday and Sunday.
In the fight against escalating inflation, the European Central Bank (ECB) initiated the turnaround in interest rates in July and raised the key rates for the first time since 2011. Key interest rates were raised by 0.50 percentage points.
With their second rate hike on Thursday a week ago, the monetary watchdogs followed up even more clearly: the increase of 0.75 percentage points was the sharpest interest rate hike since the introduction of euro cash in 2002. The key interest rate is now 1.25 percent and the so-called deposit rate at 0.75 percent.
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Inflation has eaten its way into almost all areas of life, said Nagel. “We are still very far away with interest rates, where interest rates then match the inflation rate that we are going to target,” he said. The ECB is targeting two percent inflation as the ideal value for the economy.
In August, however, inflation in the euro area was more than four times as high at 9.1 percent. “Inflation always has a social dimension, that’s why it’s so dangerous,” said Nagel. It is dangerous as far as competitiveness is concerned, it is dangerous as far as growth prospects are concerned. However, a quick solution cannot be promised.
Nagel commented positively on the federal government’s relief measures. “From the Bundesbank’s point of view, the federal government’s third relief package is very helpful,” he said. It starts where help is most needed. In view of the sharp rise in energy prices, the federal government has put together a new relief package of at least 65 billion euros to support the population and companies. The volume is more than twice as large as that of the first two relief packages with a total of 30 billion euros.
More: Bundesbank President underlines the need for further interest rate hikes