2023-05-24 08:38:58
DAccording to Bundesbank boss Joachim Nagel, the ECB must raise interest rates in the fight against inflation and accept that the economy will be dampened in the process. “Of course not everyone likes that,” he emphasized on Tuesday evening at the Economic Day of the Economic Council of the CDU in Berlin. But even if raising interest rates to a sufficiently restrictive level requires unpopular decisions, the ECB must live up to its mandate: the medium-term goal of the monetary authorities for inflation is 2 percent: “No more and no less. And we want to achieve this goal in the near future.”
At the conference, Deutsche Bank boss Christian Sewing also spoke out in favor of further interest rate hikes by the European Central Bank (ECB) in order to get the highest inflation in decades under control: “This poison has to go.” Consumer. At least 30 percent of bank customers can no longer cover their normal expenses from their income, but have to resort to their savings.
In Nagel’s view, price stability makes an important contribution to social cohesion in society and to economic participation. “Prosperity for all cannot be achieved with high inflation,” emphasized the central bank governor.
The headline inflation rate is declining, but core inflation remains stubbornly high: In April, the inflation rate excluding energy and food costs in the euro area rose by 5.6 percent. That was only slightly less than in March, when this so-called core rate had reached an all-time high: “It shows that the wave of inflation is now broad-based,” said Nagel. He will personally work to get inflation under control.
Several rate hikes are definitely needed to reach a sufficiently restrictive level: “Our job is not done yet,” said the head of the Bundesbank. The art of monetary policy now is to be more persistent than inflation. Companies and unions must also join the fight against inflation: “Let’s kill the beast inflation together.”
At the beginning of May, the ECB’s monetary guardians led by central bank chief Christine Lagarde raised interest rates by 0.25 percentage points. The deposit rate that is decisive on the financial markets and that financial institutions receive for parking excess funds has been 3.25 percent since then. It was the seventh rate hike in a row. Numbers eight and nine could follow in the summer: economists surveyed by Reuters expect further small increases of 0.25 percentage points each for the interest rate meetings of the ECB in June and July.
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