By David Barwick – BANGKOK (Econostream) – European Central Bank Governing Council member Joachim Nagel said Friday that another interest rate increase might be needed if the current inflation environment persisted, while stressing that policy should continue to be decided meeting by meeting.

Nagel, president of the Bundesbank, said on the sidelines of the International Monetary Fund and World Bank annual meetings in Bangkok that policy would remain geared toward restoring price stability over the medium term.

“We have recently raised key interest rates twice,” Nagel said. “If the situation remains as it is, I do not rule out that we may possibly have to do more.”

He said unusually volatile conditions reinforced the case for taking decisions one meeting at a time rather than committing in advance to a particular rate path.

Nagel’s comments left open the possibility of further tightening without indicating whether he would favor acting in October or waiting until December.

Turning to Germany, Nagel said the improvement in activity appeared capable of lasting beyond the current year rather than representing a temporary rebound.

He said stronger momentum could develop if the recovery coincided with implementation of the government’s reform agenda and productivity gains associated with artificial intelligence.

The numbers had “quite some catch-up potential in the right direction,” Nagel said.