The governor of the German central bank expects an increase in European interest rates in July


The member of the European Central Bank’s Governing Council and governor the German central bank, Dr. Joachim Nagel, said that he expects the Governing Council’s decision to increase European interest during its scheduled meeting later this month, while the September meeting’s decision will await the economic data that will be issued during the previous period.

Dr. Joachim Nagel said on Monday, “We have to increase interest in the next meeting, and I expect an increase of 25 basis points in the July meeting … For the September meeting, we will see what the economic data tells us”.

In an interview with Bloomberg TV in the Indian city of Gandhinagar, where he participates in meetings of finance ministers and central bank governors of the Group of Twenty countries, Dr. Joachim Nagel described the core inflation rate, which excludes the most volatile food and energy prices, as very static.

He added, “To one degree or another, the core inflation rate in all developed countries didn’t decline at the same pace as it did in the last cycle of rising, and described inflation again as a greedy monster”.

According to Bloomberg, that while analysts and markets expect European interest rates to rise during the Board of Governors meetings during the current month and next September, bringing the interest rate on deposits to 4% compared to 3.5% currently, the perception of the path of monetary policy after this summer is still unclear for officials.

Some European officials, including Dr. Joachim Nagel himself, say that an increase in interest again after the next September meeting isn’t excluded.

Earlier this month, Dr. Joachim Nagel said in Frankfurt that the Eurozone needs to keep raising interest rates to rein in inflation.

Nagel added in a written speech before the Frankfurt Euro Finance Summit, “While the rate of inflation in the Euro area is declining, it’s still high, and the latest forecasts indicate that we cannot bet on restoring price stability in the near term… Inflation has proven to be more stable than many expected… Monetary policy must show itself to be more resolute and consistent than many expect”.

It’s noteworthy that the European Central Bank began tightening monetary policy last summer and raised the interest rate 8 times in a row since last July, after years of negative interest or close to zero percent.

The European interest rate is currently 4% after its last increase on June 21.

The President of the European Central Bank, Christine Lagarde, pointed to the possibility of adopting a new increase in the European interest rate during the meeting of the Bank’s Governing Council on July 27.

According to Dr. Joachim Nagel, an interest rate increase after this July may be on the table, adding that an interest rate increase in the July meeting will depend on the change in the nature of economic data in the future.

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