Practically Everyone at ECB Expects an Increase of 25BP Next Week, Nagel Says
19 July 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – A 25bp hike at next week’s European Central Bank meeting is a near certainty, ECB Governing Council member Joachim Nagel said on Wednesday.
In an interview with German media group newsroom RedaktionsNetzwerk Deutschland, Nagel, who heads the German Bundesbank, said that on the ECB’s Governing Council, ‘practically everyone expects an increase of 25bp’ at the meeting on 27 July.
‘In the ECB Governing Council, we decide for good reason depending on the respective data situation. But we are unanimous: interest rates will rise as high and remain at this level for as long as necessary to bring inflation back to our target rate of 2%’, he said.
Premature rate cuts needed to be avoided, he argued: ‘Inflation is a greedy beast. That's why it would be a mistake to ease up on the fight too soon and cut interest rates again prematurely.’
Changing the ECB’s inflation target ‘would be a huge mistake’, he said. ‘It would undermine our credibility that we are determined to ensure price stability. Inflation expectations would continue to rise and, ultimately, so would inflation. That would not help anyone.’