PHOENIX
Bonn (ots)
Bundesbank President Joachim Nagel indicated that the European Central Bank will be forced to raise interest rates further in December. “One thing is clear: interest rate hikes must continue. The inflation picture is proving to be persistent and we need to be even more persistent with what we are doing to fend off inflation,” Nagel said on the Phoenix TV channel. Incidentally, he assesses the situation in such a way that he expects a significant cooling of the economy by the beginning of next year. “But let’s not assume there will be a hard landing. We will rather be dealing with a mild recession,” the Bundesbank president continued.
An inflation rate of around 7 percent in Germany, “perhaps even higher”, must also be assumed in the coming year. From 2024, on the other hand, significantly lower numbers are expected. “We will reach 2% with the monetary policy measures that we have already introduced this year,” said Nagel. The head of the French central bank, Francois Villeroy de Galhau, was of the same conviction. It takes 18 to 24 months for the measures to take effect. However, Villeroy de Galhau warned against going overboard with the means of state aid measures. “It can only be temporary and must be targeted, otherwise it costs too much and is not effective even in the long term.” Nagel was in full agreement. “The signal from fiscal policy must be that the debt brake is being restored.” It is imperative to work with stable budgets. “This must be the standard for the future.”
Villeroy de Galhau called on EU countries to work actively to reduce their debt and meet the Maastricht criteria from 2024 onwards. “We need clear rules and they must be applied in the future. The previous rules were too theoretical.” Nagel added: “We need more commitment and accountability, as well as more transparency. It must be more understandable for EU countries how to achieve the goals quickly.” The president of the Bundesbank was not worried about the euro. “We are much more resilient to crises than we were in 2008.”
Both Nagel and Villeroy de Galhau have called for a capital market union to be set up very soon to be able to finance green and digital change projects. “Several hundreds of billions of euros of private capital are needed every year to start emissions at the speed now needed,” says Joachim Nagel. Villeroy de Galhau said the main hurdles that have emerged so far have been bureaucratic and technical. “In any case, I don’t see a big political problem.”
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Original content from: PHOENIX, broadcast by news aktuell