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ECB: Nagel, rates will rise, possible German recession

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Sales: tourism saves revenues, fears for September (ANSA)

(ANSA) – ROME, AUGUST 20 – “Given the high inflation, further increases in interest rates will have to follow”. This was stated by Bundesbank president Joachin Nagel in an interview with the Rheinische Post in which he also warned that Germany could face a recession if the energy situation worsens.

The decision on interest rates will be taken at the next meeting of the ECB Board, scheduled for 8 September, but the German representative, considered one of the hawks, did not want to provide information on the extent of the increase he deems necessary. “The past few months have shown us that we have to decide on monetary policy on a meeting-by-meeting basis,” he replied. European inflation is now above 9% and last month the ECB raised rates by 50 basis points. “It will be crucial – says Nagel – to keep the medium-term inflation expectation stable at around 2%” The trend of the European economy has not made the situation easier and the prospects for Germany are particularly difficult. “If the energy crisis worsens – said Nagel – a recession seems likely next winter. The German economy still had a sufficiently positive performance in the face of the difficult conditions of the first half of the year. Despite these, if further supply problems arise. he will add, for example due to water scarcity which reduces the level of rivers, the economic prospects in the second half of the year will deteriorate further “.

In the interview Nagel who also asked for a commitment of the unions in the confrontation for wage renewals. German inflation – she explained – largely depends on energy costs: “it means that we will have to spend more on energy imports”. The trade unions – he added – “have acted with great responsibility over the last 25 years and will do the same this time too. I am sure of it” (ANSA).

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Source: Ansa

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