The European Central Bank (ECB) may raise interest rates later this year as high inflation is proving to be more persistent than previously thought, German central bank governor Joachim Nagel told Die Zeit newspaper on Wednesday. fair (9).
Last week, the ECB backtracked on an earlier pledge not to raise borrowing costs in 2022, but it also tried to temper expectations about interest rate hikes after markets quickly priced in two hikes that would take its deposit rate back to zero. zero in December.
In keeping with the Bundesbank’s historically conservative line, Nagel, who took over the German central bank in January, said in an interview that acting too late to normalize monetary policy could be especially costly.
“If the inflation picture remains unchanged in March, I would be in favor of normalizing monetary policy,” Nagel told Die Zeit.
“The first step is to discontinue net asset purchases throughout 2022. Then interest rates can be increased before this year is over.”
Nagel joined Dutch central bank governor Klaas Knot in openly discussing a rate hike this year by the ECB, which would be the first since 2011.
“If we act late, we would have to raise interest rates more substantially and faster. Financial markets would then respond with greater volatility,” said Nagel.
Nagel also said inflation in Germany, the eurozone’s biggest economy, is expected to exceed 4% “significantly” in 2022, more than double the ECB’s 2% rate target and also well above the Bundesbank’s own projection. , of 3.6%.
“There are signs that the rise in energy prices may be more persistent, that it is affecting the prices of other goods and services and that rising demand is also behind it,” he told the paper.
Source: CNN Brasil

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