Bundesbank President and ECB Governing Council member, Joachim Nagel expects a 25 bps increase for the upcoming July meeting of ECB. As for the meeting in September, Nagel stated on Monday, “we will see what the data will tell us.”
Unlike previous financial cycles, core inflation rates in developed nations are not declining as swiftly, implying a more drawn-out recovery process. Despite this, Nagel dismissed the notion of an over-tightened policy risking a hard landing for Europe as interest rates rise. “It’s too early to really declare a certain kind of victory when it comes to our inflation fight,” Nagel remarked.
Notably, the Bundesbank chief advised patience in the face of these challenges, acknowledging a potentially slower pace in transmission of monetary policy. “This time maybe we have to be a little bit more patient. The pace of the transmission channel is maybe not as fast as it was in the past,” he added.
