(Finance) – “Although current inflation rates are significantly below the peaks of October, we still have a long way to go to reach our inflation target. In addition, uncertainty about inflation remains high,” he said Joachim NagelPresident of the Bundesbank and then a member of the Governing Council of the European Central Bank (ECB), at an event in Amsterdam.
Nagel recalled that, since July 2022, Frankfurt has raised its key interest rates by one total of 400 basis points in eight consecutive roundsas well as stopping net purchases under the APP and PEPP programmes. And last but not least, it decided to end reinvestments under the APP in July.
“However, our job it has not yet been completed“said the German economist, emphasizing that three levers must be used.
“First, our official rate must be high enough – he explained – The way I see it, we still have a lot of ground to cover. We may need to continue raising rates after the summer break. Secondly, once we have peaked, we will remain there until we are certain of a safe and timely return of inflation to our 2% target. And third, we need to sustain this interest rate policy by reducing our balance sheet. I warmly welcome the decisions to accelerate the pace of this reduction.”