ECB’s Nagel: ‘What Is Clear Is that the Interest Rate Hikes Must Continue’

4 December 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Sunday said it was clear that the ECB had to continue to raise official borrowing costs.

In an interview with German television channel Phoenix at which he was joined by Banque de France Governor François Villeroy de Galhau, Nagel, who heads the German Bundesbank, said that the Governing Council would make a decision this month on the basis of the data available then, including the new staff macroeconomic projections, which would encompass 2025 for the first time.

‘What is clear is that the interest rate hikes must continue’, he said. ‘The inflation picture is proving to be persistent. And we have to be even more persistent with monetary policy, with what we are doing, in order to get inflation back to where it should be, and we will discuss the level of the interest rate step in the December meeting.’

The ECB still had ‘a long way to go’, he said, noting that inflation was ‘far too high’ and average inflation in Germany this year would be about 8.5%.

‘For next year we expect inflation in Germany to be possibly 7%, maybe even higher’, he said. ‘But then, I am firmly convinced that we will see much lower inflation rates from 2024 onwards.’