The Bundesbank President calls for decisive action to combat inflation.
(Photo: dpa)
Frankfurt According to Bundesbank President Joachim Nagel, the European Central Bank (ECB) has not yet reached its goal of combating inflation. The central bank may have to raise interest rates further after the summer break, Nagel said in a speech at a Group of Thirty event in Berlin on Friday, according to the speech text. “The way I see it, we still have a way to go.”
The ECB decided on Thursday to raise interest rates for the eighth time in a row and has already announced the next hike for July. After the summer break, the monetary authorities will meet again on September 14 to make an interest rate decision.
At their monetary policy meeting on Thursday, the monetary authorities headed by the head of the central bank, Christine Lagarde, raised interest rates by 0.25 percentage points, as they did in May. The deposit rate, which sets the trend on the financial markets and which financial institutions receive from the central bank for parking excess funds, will thus be 3.50 percent in the future – the highest level for 22 years.
“Once we peak, we will stay there until we are confident that inflation will return to our 2% target safely and in a timely manner,” Nagel said, looking ahead to rate hikes. In addition, the interest rate policy must be accompanied by a reduction in the central bank balance sheet.
With a value of two percent, the central bank sees price stability in the medium term. Inflation in the euro area was more than three times as high at 6.1 percent in May.
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