Despite the fact that inflation is trending downward in the euro zone, there is still “something to go” in the cycle of interest rate rises, the president of the Federal Bank of Germany warned on Monday. In less than a year, the European Central Bank has raised its benchmark rates by four percentage points, responding in an unprecedented way to persistently high inflation in the Eurozone. Most likely, the institution will decide on a new rate hike in July to fight high inflation, its president, Christine Lagarde, has already indicated.
The decisions that will be made after July will depend “on the evolution of the data” but “in my opinion, we still have a long way to go,” said the president of the Federal Bank of Germany, Joachim Nagel, at a banking congress on Monday. in Frankfurt.
This “hawk” in favor of a tight monetary policy therefore believes that “the signs” currently point “clearly in the direction of further tightening.”
No return to price stability “in the near future”
Inflation is certainly on the decline, at 5.5% in June according to Eurostat, far from the level of 10.6% in October, mainly due to the fall in energy prices. However, these values remain well above the ECB’s 2% inflation target. Inflation “is still too high” and we should not expect a return to price stability “in the near future”, according to Joachim Nagel.
Last week, the ECB president also took a strong tone, warning that the rate hike would continue. “Our work is not done,” said Christine Lagarde.
Source: BFM TV
