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The president of the Bundesbank defends new ECB rate hikes beyond what was expected

The president of the Bundesbank, the central bank of Germany, said this Saturday that more rises in interest rates in the euro zone will be “necessary”, in addition to the one already planned for the end of October, to combat the rise in inflation.

“In my opinion, it will take more increases in interest rates for inflation to [dentro do objetivo] of 2% in the medium term, and not only the one foreseen in the monetary policy meeting at the end of October” of the European Central Bank (ECB), said Joachim Nagel, in a speech in Washington, the text of which was released by the Bundesbank.

“The Governing Council should not relax its monetary tightening in the short term,” he defended, because it is necessary “for high inflation to end,” he insisted.

Inflation, or the general rise in prices, reached 10% in September in the euro zone.

In July, the ECB began to raise its interest rates sharply, in line with its main mission of guaranteeing price stability.

He believes that the continued slowdown in the eurozone economy in the context of an energy crisis linked to the war in Ukraine will not be able to curb inflation sufficiently.

The next meeting of the institution’s Governing Board, scheduled for October 27, could lead to a new increase of 0.75 basis points in directors’ rates, after a similar increase, which was historic, in September, according to statements by bankers and observers. of the eurozone.

The ECB’s official interest rate now stands at 1.25% and, according to analysts, should rise to at least 2.5%-3% in early 2023.

Source: TSF

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