ECB Governing Council member Nagel: Decisive action will be taken if necessary to push inflation back to the 2% target

The Zhitong Finance App learned that Bundesbank President and ECB Managing Director Achim Nagel said that the ECB will take decisive action if necessary to push the inflation rate back to the target level. He said on Friday that consumer price increases are once again rising, and it is impossible to rule out the possibility that prices will continue to rise in the next few weeks. Rising energy costs are the main driving factor.

“Medium-term inflation expectations must be firmly anchored in our 2% inflation target,” Nagle said. “Therefore, the Management Committee will continue to closely monitor price trends and act decisively when necessary.”

The day before Nagel made these remarks, the ECB kept borrowing costs unchanged. Previously, the war in Iran caused energy costs to soar, and the ECB had already raised interest rates by 25 basis points twice. Eurozone inflation is expected to accelerate to 3.9% in October from 3.8% in the previous month.

People familiar with the matter said on Thursday that if the inflation outlook does not improve, officials are ready to tighten policy again in December. The current deposit interest rate is 2.5%, which is at the upper end of what is seen as the neutral impact of monetary policy on the economy.

Nagle stressed that the decision to keep interest rates unchanged on Thursday was “not easy” in view of recent inflation trends. ECB President Christine Lagarde said on Thursday that the meeting had discussed raising interest rates this month and finally decided to stay on hold for the time being.

“On the positive side, no significant second-round effects have been observed so far,” Nagle said. But to maintain this situation, it is “essential” that inflation expectations remain anchored. “This is also one of the key messages of yesterday's interest rate decision,” Nagle said.