Nagel Says Sticky Inflation Means ECB Will Have To Be ‘Stubborn’ in Inflation Fight
13 April 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – Governing Council member Joachim Nagel said on Thursday that persistent inflation required a stubborn response from the European Central Bank.
In an interview with CNBC, Nagel, who heads the German Bundesbank, said that he was more positive than the International Monetary Fund regarding the economic outlook for Germany, and did not foresee a recession this year.
‘Core inflation is sticky, inflation in all its composites is a very stubborn phenomenon and so it's definitely the case that we on the monetary policy side have to be even more stubborn in the fight against inflation’, he said. The ECB had ‘to do more on the inflation front’, he said, with ‘core inflation still on this very elevated level’.
‘I am even more positive than the IMF, so I do not see the mild recession for this year. I think maybe the first quarter could be a rather weak quarter, but the rest of the year seems to be pretty good. So we are ending up with maybe a tiny plus or something like this’, he told viewers. The IMF predicted in its World Economic Outlook, released on Tuesday, that the German economy would contract by 0.1% in 2023.
Regarding the energy situation in Germany, the energy crisis was ‘more or less solved', he said.
‘We had really worrying situation in the past, but this is now over and the outlook is good’, he said.
On the ECB’s upcoming monetary policy meeting, he said: ‘What is also important to me, we went through some financial market turbulence uncertainty over the last five weeks and now we have to find out what was the impact out of that, and we have to wait for the incoming data until we have our next meeting in May, and then we will see’.
‘There is no contradiction between what we have to do on the price stability side and on the financial stability side’, he said.
‘We have different instruments to tackle the price issues and the financial stability issues, so it was an important message to the financial market participants that we are very committed when it comes to fighting against inflation.’