By Marta Vilar – SORRENTO, Italy (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Monday he was concerned about inflation, describing the current picture as “challenging” as sharply higher energy prices add to uncertainty ahead of the ECB’s upcoming policy meeting.

“A central banker by nature is concerned about inflation,” Nagel, who heads the Deutsche Bundesbank, said during a fireside chat at the Global Precious Metals Conference in Sorrento, Italy.

“I have to admit the inflation picture is challenging,” he added.

Nagel said most of the inflation developments he had observed in recent months had stemmed from higher energy prices, pointing to the sharp increase in oil prices since the summer.

“Before our lovely summer break in July, the oil price was around $70 [per barrel], now back to above $100,” he said.

Nagel said that rapidly changing conditions reinforced the case for the ECB to maintain its meeting-by-meeting approach rather than prejudge its next interest rate decision.

“We will come together soon, we have this meeting-by-meeting approach,” Nagel said, describing it as “the most adequate approach.”

“In the last three months we went through a very bumpy road. This is a rollercoaster; things are changing on a daily basis. We have to be prepared for this,” he said.

“But yes, I am concerned,” he said about inflation.

Asked about fiscal policy and developments in sovereign bond markets, Nagel declined to comment on individual countries or specific yield levels, describing the issue as “very sensitive.”

He highlighted the importance of sound public finances for the ECB’s ability to deliver price stability.

He said the ECB’s job in the past few years would have “been much easier if there had been more fiscal discipline,” Nagel said.

Nagel also noted a strong correlation between bond yields and gold prices identified in economic research, while declining to draw conclusions about the current yield levels of individual countries.