2023-07-06 13:30:17
Joachim Nagel, President of the Bundesbank, has expressed his opinion in favor of the European Central Bank (ECB) going ahead with rate hikes, since, in his opinion, the cycle of monetary tightening and price stability has not yet been fully covered. It’s not going to appear out of nowhere, as if by magic.”
In this sense, in a speech delivered in Frankfurt, the German central banker stressed that the ECB has undertaken a 400 basis point rise in interest rates in just one year, after eight consecutive rate hikes.
However, despite this sharp increase in the price of money in the Eurozone, Nagel has stated that he does not believe that we have reached the end of the tightening road yet. “As things stand, the interest rates they will have to go up even more,” he warned.
“Price stability is not going to appear out of nowhere, as if by magic. It requires a decisive monetary policy response », she has defended.
On this matter, the president of the Bundesbank has recognized that, currently, it is impossible to know how much rates will have to rise further, nor can it be known how long they will remain high or what their evolution will be in the future, since everything depends on how the inflation, which is highly uncertain.
However, for Nagel it is clear that “the era of zero interest rates is over for now” and that, despite not knowing what the future holds, what is known is that monetary policy will do what is necessary to overcome high inflation.
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