In an Financial Times interview, Bundesbank President Joachim Nagel expressed that the fight against inflation is far from over, despite the ECB’s efforts to curb it. He stated, “Our fight against inflation is not over. There’s certainly no mistaking that price pressures are strong and broad-based across the economy.”
Nagel emphasized the need for persistence in combating inflation, suggesting that “If we are to tame this stubborn inflation, we will have to be even more stubborn.”
He also highlighted the progress made by ECB, mentioning that they are “approaching restrictive territory.” However, he warned against the potential pitfalls of stopping rate hikes too soon and succumbing to calls for rate cuts. According to Nagel, doing so would risk a repeat of the 1970s, when “inflation flared up again” following the oil supply shocks.
As for concerns surrounding the recent banking crisis, Nagel dismissed comparisons to the 2008 financial crisis. He confidently asserted, “We are not facing a repeat of the financial crisis we saw in 2008. We can manage this with the Eurozone’s “resilient” banking system.
