Bundesbank President Joachim Nagel said in a radio interview on Sunday that last week’s 75bps hike was a “clear sign and if the inflation picture stays the same, further clear steps must follow.”
He added that inflation may peak at more than 10% in December. “In the course of 2023, the inflation picture is likely to weaken somewhat,” he said. Still, the rate “is likely to be at a far-too-high level of over 6%.”
While there “currently are some indications that the economy could stagnate or even contract in the second half of 2022 and that this trend could continue into next year, any recession may be shallow,” Nagel added.
“In the end, stable prices are much more important for medium-term, long-term growth, for a good outlook for the euro area,” he said. “We may need to overcome a dry spell, but for now at least it looks like this dry spell and the decline in economic output will not be severe.”
