[Asia Economy Reporter Park Byung-hee] Joachim Nagel, President of the German central bank Bundesbank, expressed support for the European Central Bank (ECB) to raise its benchmark interest rate in July.
According to Bloomberg on the 10th (local time), President Nagel participated in an event held in Eltville, western Germany, and said, "If next month's inflation forecast shows that inflation may continue strongly, the ECB should start raising the benchmark interest rate from July." He added, "If Eurozone inflation remains at a high level, the ECB needs to take action."
Regarding the ECB's ongoing bond purchase policy, President Nagel said, "Net bond purchases are expected to stop by the end of June."
As Eurozone inflation remains high, voices within the ECB calling for an expedited interest rate hike have been growing. Recently, Olli Rehn, Governor of the Bank of Finland, known as a moderate, also stated that the ECB should raise the benchmark interest rate as early as July.
President Nagel pointed out, "A too-late monetary policy shift is a risky strategy," and warned, "The risks caused by a delayed interest rate hike are also increasing."
He also said that there is no need to cling to past statements by ECB monetary policy members who took a moderate stance on inflation, and that the ECB should change monetary policy in a predictable and gradual manner so that the private sector can prepare for interest rate hikes.
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