(Bloomberg) — The European Central Bank may need to deliver significant interest-rate increases into the second quarter, according to Governing Council member Joachim Nagel.
(Bloomberg) — The European Central Bank may need to deliver significant interest-rate increases into the second quarter, according to Governing Council member Joachim Nagel.
“I expect a robust rate increase in March” as inflation retreats only slowly, the Bundesbank president said on the sidelines of a Group of 20 meeting of finance chiefs.
“I don’t exclude that further significant rate hikes may be needed beyond March,” he said Friday in Bengaluru, India.
With figures this week revealing record underlying price pressures, the half-point hike the ECB has been planning for next month’s meeting is looking all but certain. That’s switching attention to the next gathering, in May, when Nagel’s remarks suggest he might favor an identical step.
Economic data Friday could prompt questions about the need for sustained rate increases. A final reading of German output showed a quarterly decline of 0.4% in the final three months of 2022 — twice the earlier estimate.
While the result will stir concerns about a European recession that had been receding of late as warm winter weather eased the energy crisis, surveys of sentiment have been improving in the continent’s biggest economy and for the 20-nation euro zone too.
“Recession fears are increasingly disappearing into the background,” Nagel said. But with core inflation, in particular, still much too high, “monetary policy therefore has to tighten the reins.”
“It would be a cardinal sin to let up too soon,” he said.
(Updates with more from Nagel in last two paragraphs.)
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