German Bundesbank President Joachim Nagel said the bleak economic outlook will not deter the European Central Bank from fighting record inflation.
In statements to “Deutschlandfunk” radio, European Central Bank Council member Nagel said today, Sunday, that it is not excluded that there will be lower rates of growth or a recession, “but the root of the matter is that stable prices are ultimately more important for growth in the medium term. the long-term and the good economic outlook for the eurozone.
Nagel added that it is possible that there will be a difficult stage that will have to be overcome, and said that it appears at the present time that the decline in economic performance will not be very strong.
Last Thursday, the Central Bank decided to raise the key interest rate by 75 basis points, the highest increase of its kind in its history, and this move came once morest the background of the rapid increase in consumer prices, which is primarily due to the Russian war on Ukraine and the subsequent effects of the Corona pandemic.
Nagel explained that he expects the rate of price growth to accelerate and the inflation rate to reach its peak next December, as it will exceed 10%.
He said he expected the inflation rate to continue next year as well at a high level of more than 6%.
It is noteworthy that the European Central Bank seeks mainly to keep the inflation rate at the level of 2% to maintain price stability.
Nagel stated that there are indications of the spread of inflation in many sectors, and he said that monetary policy, for this reason, should “extend a helping hand” significantly.
European Central Bank President Christine Lagarde announced that another interest rate hike is expected.
At the same time, Nagel said he is confident that the collective wage contract partners will “demonstrate responsibility” during upcoming wage negotiations.
