According to the President of the German Central Bank (Bundesbank) Joachim Nagel, the ECB “will not be influenced in its fight off record inflation by the gloomy economic outlook”.
While lower growth rates or a recession cannot be ruled out, “price stability is, in the end, much more important for medium- and long-term growth and for (a) good economic outlook for the eurozone,” Nagel said in an interview with local radio.
Nagel, also serving as ECB Governing Council member expected price growth to accelerate in Germany and inflation to exceed 10% annually by December.
Hence, the annual inflation forecast for 2023 is clearly too high at over 6%, as the ECB is targeting a 2% rate.
On the upcoming negotiations between unions and employers in Germany, the Bundesbank President expressed confidence the wage partners “will show responsibility.”
On Thursday, the ECB raised policy rates by 0.75%, the largest-ever in its history, to cope with a sharp increase in consumer price index in the wake of the Ukraine conflict and sanctions imposed on Russia.