The president of the central bank of Germany (Bundesbank), Joachim Nagel, predicted this Saturday that in the fall inflation could rise to 10% and called for a new rise in interest rates by the European Central Bank (ECB).
Nagel pointed out that the rise in inflation – which stood at 8.5% in July – would be driven by the end of measures such as subsidies for fuel and public transport prices and the application of a new price supplement of gas, according to what he said in an interview with the Rheinische Post newspaper collected by Agencia Efe .
“A double-digit inflation rate was last seen in Germany more than 70 years ago,” the Bundesbank president said, adding that if the energy crisis deepens, a recession next winter “looks likely.”
During the first half of the year, the German economy has reacted relatively well to the difficult conditions, but additional supply problems – such as the interruption of river transport due to drought – could cloud expectations, he said.
The price escalation will not stop in the near future, he predicted, and indicated that throughout 2023 the inflation rate will be above the 4.5% that the Bundesbank projections show so far.
“The probability is growing that inflation will be higher than what has been forecast and that next year we will have a six in front of the comma,” he said.
Nagel therefore demanded a new rise in interest rates by the ECB, which in July had already increased them by 0.50 percentage points and whose next meeting is scheduled for September 8.
He stated that this is a general expectation, although he did not want to provide any concrete figures and pointed out that the last few months have shown that the ECB must decide its policy in the short term, from meeting to meeting.
“The decisive thing will be to keep inflation expectations stable at 2% in the medium term. I am convinced that the ECB Council will adopt the necessary monetary policy measures for this,” said the president of the Bundesbank.