German Central Bank (Bundesbank) Head Joachim NagelHe said that the rise in prices will accelerate and inflation could reach a peak of over 10 percent in December.
Nagel told Deutschlandfunk radio that high inflation, recession in the economy and of the European Central Bank (ECB) commented on interest rate hikes.
nagel, “After all, stable prices are much more important for medium-term, long-term growth and a good economic outlook for the euro area. We may need to get through a sluggish period. At least for now, it looks like a sluggish period and the decline in economic output will not be severe.” he said.
increase in prices and “annual inflation may peak above 10 percent in December” Pointing out that, Nagel emphasized that annual inflation may weaken somewhat in 2023 and will probably be at a very high level above 6 percent.
Thus, despite the expectation of a recession in the economy, the bank made the highest rate hike since the use of the European common currency in 1999.
It is expected that the tight monetary policy will continue after the historical interest rate hike by the ECB.
In addition, the ECB’s tightening of monetary policy to combat inflation is expected to slow economic growth in the Eurozone. At the same time, there are concerns that rising interest rates in the region will increase the borrowing costs of heavily indebted countries such as Italy and Greece.
Inflation in the euro area rose to 9.1 percent
On the other hand, EurozoneIn August, annual inflation reached the highest level on record, reaching 9.1 percent due to the rise in energy prices. It is noteworthy that this figure is more than 4 times the ECB’s 2 percent target.
In Germany, annual inflation, which was 7.5 percent in July, rose again to 7.9 percent in August with the latest rise in energy and food prices, reaching the highest level since 1974.
Meanwhile, government measures against inflation in Germany, such as 9 euros for public transport tickets and tax cuts on fuel, came to an end at the end of August.
Germany, Europe’s largest economy, is facing a spiraling energy crisis triggered by Moscow’s decision to stop gas flow through the Nord Stream 1 gas pipeline.
As concerns over the Russia-Ukraine war continue to weigh on energy supplies, the German government is scrambling to keep the wheels of industry turning, the lights on and homes warm this winter.
While the increase in energy costs in the country fuels inflation upwards, it also increases the pressure on households and companies.
.