Further interest rate hikes will be necessary to combat high inflation in the eurozone. This was stated by the head of the German central bank (Bundesbank) Joachim Nagel in an interview with the Frankfurter Allgemeine Zeitung newspaper. “We have not yet won the fight against high inflation,” he said.
Still high inflation
According to Nagel, inflation in the eurozone, while falling in recent months, remains too high. The European Central Bank (ECB) raised its key interest rate by a quarter of a percentage point to 3.75 percent last week.
The ECB was thus less aggressive in tightening monetary policy than at its previous meeting, when it raised interest rates by half a percentage point. “I could see a half percentage point increase,” Nagel said of last week’s ECB decision. “But we have already announced further interest rate hikes,” he added.
Vigorous base rate hikes
The ECB started raising interest rates last July. Before that, it held the key rate at a record low of zero percent for more than six years. “We started last July and have made seven interest rate hikes so far, for a total of 3.75 percentage points. The ECB has never raised the base rate so vigorously,” Nagel said. “But inflation is also extremely high. And we are not at the end of it yet. Interest rates should continue to rise,” he added.
In a flash estimate last week, statistics office Eurostat said the eurozone’s annual inflation rate rose slightly in April to seven percent after five months of decline. The ECB’s inflation target is close to two percent.
Source Czech Press Office
