Bundesbank President Joachim Nagel has warned that inflation is proving to be more persistent than once thought.
Joachim Nagel Warns of Persistent Inflation Trend
Joachim Nagel said that the core inflation rate, which excludes changes in energy and food prices, is expected to come to 5.2% this year. This is even higher than the rate of 3.9% recorded last year.
Nagel attributed the persistent inflation to a number of factors, including the war in Ukraine, supply chain disruptions, and strong demand. He said that the ECB will need to act to bring inflation under control, but that it will need to be careful not to raise interest rates too quickly, which could slow the economy.
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Nagel’s comments come as the ECB is under pressure to raise interest rates in order to combat inflation. However, the ECB has been reluctant to do so, as it is concerned about the impact of higher interest rates on the economy.
It remains to be seen how the ECB will balance the need to control inflation with the need to support the economy. However, Nagel’s comments suggest that the ECB is likely to take a more hawkish stance on inflation in the coming months.
Source: Handelsblatt