In order to combat the record spike in inflation, Joachim Nagil, the head of the German Central Bank, advocated for a further rising of interest rates in the euro region.
At the beginning of a discussion conference for the German Central Bank in Frankfurt today, Tuesday, Najhal stated that new interest rate rises were necessary to get the inflation rate down to 2%.
It should be emphasised that the euro area’s inflation rate has been much higher for a number of months than the 2% target set by the European Central Bank.
The longer an inflationary trend continues, the more difficult it is for the monetary policy to achieve price stability, according to Nagil, who added: “This would increase the risk of entrenched inflation at a high level in the medium run.
“As a result, I will keep working to make sure that, along with the European Central Bank Council, we won’t upset too soon and that we’ll insist on getting monetary policy back to normal, even if our procedures slow down economic growth, because if monetary policy is behind the curve, the overall costs to the economy will be much higher.
The rise in energy and food costs accelerated inflation over the course of the months, and in October of last year, consumer prices in the euro area grew by 10.7% annually.
In Germany, the monthly inflation rate rose to 10.4%.
“The inflation rate in Germany is anticipated to remain high throughout the next year,” Najhal said, adding that he anticipates it will be high for a longer length of time and will reach roughly 7% in 2023.
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The “German Central” demands that interest rates be increased once more in the euro zone.
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