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Nagel: Inflation is persistent, we have to be more persistent
Bundesbank President Nagel said in a speech in Bochum: “There can be no talk of stable prices”. The underlying price pressure is much too high and has hardly decreased so far. “The Monetary policy must not and will not relax in its efforts to combat inflation. We have to be even more persistent than the current inflation,” said Nagel. He is a member of the Governing Council and therefore has a say in interest rates.
Three things are needed to overcome inflation: “Firstly, a sufficiently high interest rate level. From today’s perspective, several rate hikes are still necessary. For me it is not certain that we will reach the interest rate peak in the summer,” said Nagel. Secondly, interest rates would then have to remain at a high level “until it is beyond doubt that we will reach our target of 2 percent inflation in the near future”. Nagel thus rejected hopes that the ECB could quickly lower interest rates again after a brief interest rate peak. Third, the ECB must reduce its bond portfolio, which it has built up since the 2008 financial crisis in order to provide the economy with additional money. “From July we want to increase the rate of dismantling – I very much welcome that,” said Nagel. These measures help us to leave the inflation wave behind us and return to a stable framework.
Statements by the Italian ECB Executive Board member show that an interest rate hike in the coming week can be considered certain Fabio Panetta. He is considered an advocate of loose monetary policy. “We haven’t reached the final target yet, but we’re not far from it.” So Panetta also expects another small rate hike. “I don’t think now is the time to rush things because we’ve come a long way,” said Panetta.
Inflation expectations decline
According to a survey by the ECB, consumers in the euro zone expect inflation to fall noticeably. Expectations for inflation on a 12-month horizon fell in April to 4.1 percent from 5.0 in the previous month. In March, these expectations were even higher. With a view to a period of three years, the expectation fell from 2.9 to 2.5 percent in April.
The consumer survey is published monthly. Around 14,000 people from Germany, France, Italy, Spain, the Netherlands and Belgium will be surveyed. The countries account for around 85 percent of economic output in the euro zone. Inflation expectations play an important role in the ECB’s monetary policy.
With material from dpa
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The current key interest rates of the ECB
The key interest rate at which commercial banks can borrow money from the central bank is currently 3.75 percent. If banks park money at the ECB, they receive 3.25 percent interest. Most recently, the ECB raised the key interest rate by 0.25 percentage points. Interest rate hikes harbor the risk of slowing down the already shaky economy. They also have a delayed effect on prices.
The full impact of monetary policy measures is now starting to take hold, Lagarde said. However, there are still no clear signals that the core inflation rate has peaked. Core inflation eliminates volatile energy and food prices. It fell slightly in the euro zone in May to 5.3 percent.
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Nagel: Inflation is persistent, we have to be more persistent
Bundesbank President Nagel said in a speech in Bochum: “There can be no talk of stable prices”. The underlying price pressure is much too high and has hardly decreased so far. “The Monetary policy must not and will not relax in its efforts to combat inflation. We have to be even more persistent than the current inflation,” said Nagel. He is a member of the Governing Council and therefore has a say in interest rates.
Three things are needed to overcome inflation: “Firstly, a sufficiently high interest rate level. From today’s perspective, several rate hikes are still necessary. For me it is not certain that we will reach the interest rate peak in the summer,” said Nagel. Secondly, interest rates would then have to remain at a high level “until it is beyond doubt that we will reach our target of 2 percent inflation in the near future”. Nagel thus rejected hopes that the ECB could quickly lower interest rates again after a brief interest rate peak. Third, the ECB must reduce its bond portfolio, which it has built up since the 2008 financial crisis in order to provide the economy with additional money. “From July we want to increase the rate of dismantling – I very much welcome that,” said Nagel. These measures help us to leave the inflation wave behind us and return to a stable framework.
Statements by the Italian ECB Executive Board member show that an interest rate hike in the coming week can be considered certain Fabio Panetta. He is considered an advocate of loose monetary policy. “We haven’t reached the final target yet, but we’re not far from it.” So Panetta also expects another small rate hike. “I don’t think now is the time to rush things because we’ve come a long way,” said Panetta.
Inflation expectations decline
According to a survey by the ECB, consumers in the euro zone expect inflation to fall noticeably. Expectations for inflation on a 12-month horizon fell in April to 4.1 percent from 5.0 in the previous month. In March, these expectations were even higher. With a view to a period of three years, the expectation fell from 2.9 to 2.5 percent in April.
The consumer survey is published monthly. Around 14,000 people from Germany, France, Italy, Spain, the Netherlands and Belgium will be surveyed. The countries account for around 85 percent of economic output in the euro zone. Inflation expectations play an important role in the ECB’s monetary policy.
With material from dpa
read too
The European Central Bank (ECB) intends to raise interest rates again next week. This is shown by numerous statements by their leaders.
ECB President Christine Lagarde and Bundesbank boss Joachim Nagel held out the prospect of further rate hikes. Similar voices come even from Italy, which stands for a rather loose monetary policy.
On June 15, the ECB will decide on the key interest rates. An increase of 0.25 percentage points is now expected. It would be the eighth in a row.
In the fight against stubborn inflation, the European Central Bank (ECB) intends to raise key interest rates further in the coming week. This emerges from statements by the ECB leadership. “Price pressure remains strong,” said President Christine Lagarde. The ECB will ensure that Inflation further back. It will “depend on the incoming data by how much interest rates still have to be increased,” said German ECB Executive Board member Isabel Schnabel.
Bundesbank boss Joachim Nagel even advocated several more rate hikes this summer. Deutsche Bank also assumes that the cycle of rate hikes will not be over before the fall. The economists also expect that interest rates will then remain high for a longer period.
The Governing Council of the ECB will decide on the key interest rates on June 15, i.e. Thursday next week. Since July 2022, the central bank has increased key interest rates in seven steps by a total of 3.75 percentage points. This is the largest rate hike in the ECB’s 25-year history. In the coming week, it is likely to raise interest rates by 0.25 percentage points, as recently. Schnabel’s statements also allowed for a rate hike of 0.50 percentage points.
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As a result, the Interest charges for savers and investors as well as for private borrowers and companies will continue to rise.
Inflation has passed its peak both in Europe and in Germany. But she is slowly coming back. The prices continue to rise unusually strong. IIn the euro zone, prices rose by 6.1 percent in May compared to the previous year. In Germany, inflation was 6.3 percent. The ECB is aiming for an inflation rate of 2 percent.
“Our future decisions will ensure that policy rates are brought to sufficiently restrictive levels,” Lagarde said. Schnabel also dampened the expectation that the interest rate peak had been reached: “We need to see convincing evidence that inflation is returning to our two percent target in a sustainable and timely manner. We’re not at that point yet,” Schnabel told the Belgian newspaper De Tijd.
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The current key interest rates of the ECB
The key interest rate at which commercial banks can borrow money from the central bank is currently 3.75 percent. If banks park money at the ECB, they receive 3.25 percent interest. Most recently, the ECB raised the key interest rate by 0.25 percentage points. Interest rate hikes harbor the risk of slowing down the already shaky economy. They also have a delayed effect on prices.
The full impact of monetary policy measures is now starting to take hold, Lagarde said. However, there are still no clear signals that the core inflation rate has peaked. Core inflation eliminates volatile energy and food prices. It fell slightly in the euro zone in May to 5.3 percent.
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Your privacy settings prevent the loading and display of all external content (e.g. graphics or tables) and social networks (e.g. Youtube, Twitter, Facebook, Instagram etc.). To display, please activate the settings for social networks and external content in the privacy settings .
Nagel: Inflation is persistent, we have to be more persistent
Bundesbank President Nagel said in a speech in Bochum: “There can be no talk of stable prices”. The underlying price pressure is much too high and has hardly decreased so far. “The Monetary policy must not and will not relax in its efforts to combat inflation. We have to be even more persistent than the current inflation,” said Nagel. He is a member of the Governing Council and therefore has a say in interest rates.
Three things are needed to overcome inflation: “Firstly, a sufficiently high interest rate level. From today’s perspective, several rate hikes are still necessary. For me it is not certain that we will reach the interest rate peak in the summer,” said Nagel. Secondly, interest rates would then have to remain at a high level “until it is beyond doubt that we will reach our target of 2 percent inflation in the near future”. Nagel thus rejected hopes that the ECB could quickly lower interest rates again after a brief interest rate peak. Third, the ECB must reduce its bond portfolio, which it has built up since the 2008 financial crisis in order to provide the economy with additional money. “From July we want to increase the rate of dismantling – I very much welcome that,” said Nagel. These measures help us to leave the inflation wave behind us and return to a stable framework.
Statements by the Italian ECB Executive Board member show that an interest rate hike in the coming week can be considered certain Fabio Panetta. He is considered an advocate of loose monetary policy. “We haven’t reached the final target yet, but we’re not far from it.” So Panetta also expects another small rate hike. “I don’t think now is the time to rush things because we’ve come a long way,” said Panetta.
Inflation expectations decline
According to a survey by the ECB, consumers in the euro zone expect inflation to fall noticeably. Expectations for inflation on a 12-month horizon fell in April to 4.1 percent from 5.0 in the previous month. In March, these expectations were even higher. With a view to a period of three years, the expectation fell from 2.9 to 2.5 percent in April.
The consumer survey is published monthly. Around 14,000 people from Germany, France, Italy, Spain, the Netherlands and Belgium will be surveyed. The countries account for around 85 percent of economic output in the euro zone. Inflation expectations play an important role in the ECB’s monetary policy.
With material from dpa
read too