New interest rate hikes in the euro zone will be “necessary” after that already expected at the end of October to fight against soaring inflation, said the President of the Bundesbank on Saturday.
“In my view, further interest rate hikes will be needed to bring inflation back to (the target) 2% over the medium term, and not just at the monetary policy meeting at the end of October,” said Joachim Nagel according to the text of a speech given in Washington and broadcast by the Bundesbank in Germany.
“In any case, the Governing Council of the ECB should not relax too soon” its monetary tightening, he said.
“Because we have to make sure that high inflation stops,” he insisted. The rate reached 10% in September in the euro zone.
The ECB started in July to tighten its rates abruptly, faithful to its main mission which consists in guaranteeing price stability.
It believes that the ongoing economic slowdown in the euro zone amid the energy crisis linked to the war in Ukraine will not be able to dampen inflation sufficiently.
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The next meeting of the institution’s board of governors, scheduled for October 27, could lead to a further 0.75 point rise in key rates, as in September, according to statements by eurozone bankers and observers.