China Xiaokang Net, September 10th, the old horse The European Central Bank (ECB) launched the largest interest rate hike in its history , in response to persistently high inflation. The main interest rate in the euro zone rose by 0.75 percentage points to 1.25%. Inflation in the euro zone recently surpassed 9%. This is an important step in the right direction, Bundesbank President Joachim Nagel said on Deutschlandfunk. He also sees a need for further rate hikes in the near future. As President of the Bundesbank, Nagel also serves as a member of the ECB Council, the highest policy-making body of the European Central Bank. Sitting next to him on the Governing Council are the six members of the ECB's executive board and the 18 presidents of the central banks of the rest of the euro zone member states.
Nagel said prices in the euro zone will continue to rise. Inflation is likely to exceed 10 percent in December, and inflation of more than 6 percent in the coming year is clearly too high. If inflation remains this way, interest rates will have to rise. The council must act responsibly. When fighting inflation , it is important to send a clear signal. Then there's nothing to say from ECB President Christine Lagarde , which will have to follow with further sharp rate hikes.
Bundesbank President warned that inflation should not erode all areas. Low incomes are particularly affected by rising food and energy prices. If inflation solidifies, it will also affect wages.
Nagel expects growth to level off in the third and fourth quarters, with a possible recession in the new year. But he said the dry spell won't be so bad and will end soon. Finally, stable prices are the most important. Inflation is also expected to fall in 2023.
