WASHINGTON (Reuters) – Several more interest rate hikes in the euro zone are needed to bring inflation under control despite the risk of a deep recession in Germany, Bundesbank President Joachim Nagel said on Saturday, who also wants a reduction in the balance sheet of the European Central Bank (ECB).
“Further interest rate hikes will be needed to bring the inflation rate down to 2% over the medium term, not just at the monetary policy meeting at the end of October,” he said in a speech in Washington. .
“The Governing Council of the ECB must not let go too soon,” he added.
Money markets are currently pricing in an ECB interest rate hike of 75 basis points on October 27, a similar increase to the one decided in September.
“As monetary policy continues to normalize, we will also have to consider reducing the assets of the Eurosystem, which amount to almost 5,000 billion euros,” added Joachim Nagel.
(Report Balazs Koranyi; French version Claude Chendjou,)
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