Nagel, who sits on the Council of the European Central Bank (ECB) and is involved in deciding on interest rate changes, expects high inflation for Germany next year. “For 2023, the ECB staff has forecast 5.5 percent inflation for the euro area. In Germany, I think a six in front of the decimal point is realistic,” he said.
The head of the Bundesbank denied that the high inflation could have damaged the institution’s reputation: “I don’t see that confidence in the Bundesbank has been lost, nor in the ECB.” Nagel emphasized that central bankers take people’s concerns very seriously. “Our mission is price stability and that’s why we will react with monetary policy so that inflation falls again. We will do it.”
Nagel called on the European central banks not only to think about higher interest rates, but also to reduce their holdings of government bonds. “We must have ours monetary policy implement robustly. In the future, the Eurosystem will also have to reduce its bond holdings,” said the President of the Bundesbank. Regarding Germany’s economic prospects, Nagel said: “We will probably see a temporary recession and thus also higher insolvency figures, but from today’s perspective I do not expect a wave of insolvencies.”
/hey
MUNICH (dpa-AFX)
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