ECB’s Nagel: Inflation Far From Target, but Headed in Right Direction

2 November 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Wednesday said that though the ECB remained far from its price stabililty target, it was on the right path.

In an interview with German public broadcaster ARD, Nagel, who heads the German Bundesbank, said that the ECB was ‘still a long way away from [the] 2% target, but the direction is right.’

‘The important message first is that inflation is falling. This means that monetary policy is working, and that is a good message’, he said.

Monetary authorities were monitoring the risks of a rise in energy prices as a result of the geopolitical tensions in the Middle East and were ‘positioned to respond to it’ if necessary, he said.

‘We have decided to make new decisions from meeting to meeting, based on new data. And that is certainly the right approach in the current situation, which is characterized by a lot of uncertainty’, he said.

Turning to the domestic economy, he reiterated that ‘Germany is not the sick man of Europe’ and would resume growth.

‘There is currently a phase in which there is great uncertainty, interest rates are rising and the economy is slowing down as a result. This is part of the process to also bring down inflation’, he said.