Bundesbank President Joachim Nagel today urged his colleagues at the European Central Bank to raise interest rates in the face of persistently high inflation.
“The window of opportunity for the first monetary policy action is slowly closing and we need to see what we can do this year,” Nagel told a news conference, according to Bloomberg.
He added that “he does not accept the argument that monetary policy should show restraint just because the economic situation is difficult overall.”
Mr Nagel said the data was “talking on its own” and that further waiting risked fueling inflation expectations, which would likely require a more dynamic response later.
However, he noted that “there is no need to talk” about when and how quickly interest rates will rise, as the ECB will first decide to end its large-scale asset-buying program and then see the next steps. “It will depend on the data in June,” he said.
He concluded, however, that in any case “the era of negative interest rates will soon be over” and that “the markets have understood this message very well”.
For his part, speaking earlier today in Paris, French central banker François Villeroua de Gallo said the deposit rate (currently at -0.5%) could return above zero within the year, provided that the European economy will not face another setback.
Finally, Slovenia’s Bostian Vasle also said today in a panel discussion in Croatia that he considered it appropriate to raise ECB interest rates “before the summer”.
Source: Capital
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