The European Central Bank should not postpone raising interest rates from their record lows if inflation so requires and the central bank may be able to do so in 2022, according to the board member. Joachim Nagel.
“If the ECB finishes bond purchases as planned in the third quarter,” this offers the opportunity to raise interest rates this year, if needed, “the head of the German Bundesbank said at an event in Hanover, according to Bloomberg.
“It is clear to me that, if the inflation outlook demands it, we should continue to normalize monetary policy and also start raising our interest rates,” he said. “We should not delay leaving the very loose monetary policy.”
His remarks follow the ECB’s surprise decision this month to complete its net purchases under the asset purchase program (APP) in the third quarter.
At the same time, Nagel stressed that there are significant upside risks to inflation. “Until now, many were worried that monetary policy could stifle economic recovery if it pulled the reins too early,” Nagel said. .
Source: Capital
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