ECB’s Nagel: I Will Advocate Further Interest Rate Hikes; Must Send Clear Monetary Policy Signals
11 November 2022
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Friday said that he would support more ECB interest rate hikes.
In a speech at the 150th anniversary celebration of a commercial German bank, Nagel, who heads the German Bundesbank, said, ‘I will advocate further increases in key interest rates, because one thing is clear: in order to bring the high inflation rates down again, monetary policy must send out clear signals and have staying power.’
Inflation as elevated as it is currently ‘not only leads to an enormous loss of purchasing power and slows down consumption’, he said. ‘It can also cause payment difficulties for individuals and companies, which then affects the banks.’
As a result, banks have to watch their loan default numbers, he said.
‘Another risk for banks comes from the monetary policy response to high inflation’, in particular via the ECB’s key interest rates, he said. ‘And we in the Governing Council have significantly increased these in order to do justice to our mandate – price stability.’