According to European Central Bank President Joachim Nagel, the central bank should maintain raising interest rates even if Germany enters a recession and inflation continues uncomfortably high through 2023.
The European Central Bank unexpectedly raised interest rates by 50 basis points to zero percent last month and promised more increases, citing fears of hyperinflation as outweighing worries about growth.
However, the Rheinische Post daily reported today that Nagel stated that inflation estimates had worsened further and that price increases in Germany, the eurozone’s largest economy, may surpass 10% in the coming months.
According to Nagel, there is a rising possibility that inflation will be higher than originally forecast, averaging six points next year, and that the Bundesbanks earlier prediction of 4.5% for 2023 would be exceeded.
Nagel also conceded that if the energy situation worsens, the German economy, which has been heavily hurt by Russian gas supply delays, is likely to enter a recession this winter.
Nagel, on the other hand, indicated that the ECB should not be scared to raise interest rates, adding that the July increase was fully supported.
According to the President of the European Central Bank, interest rates will continue to climb.
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