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Bundesbank President Joachim Nagel at his company's »Backstage« event
Photo: HEIKO BECKER / REUTERS
According to Bundesbank President Joachim Nagel, the European Central Bank (ECB) is still a long way from reaching the level of interest rates that will neither boost nor slow down the economy.
"We're still a long way from this neutral rate," Nagel said on Saturday at the German central bank's open day in Frankfurt.
It is important to him that interest rate hikes continue.
»Something has to happen, something has to go up.« Under the motto »Backstage Bundesbank«, the central bank provides information about its tasks and working methods on Saturday and Sunday at its Hesse headquarters.
In the fight against escalating inflation, the European Central Bank (ECB) initiated the turnaround in interest rates in July and raised the key rates for the first time since 2011.
Key interest rates were raised by 0.50 percentage points.
With their second rate hike on Thursday a week ago, the monetary watchdogs followed up even more clearly: the increase of 0.75 percentage points was the sharpest interest rate hike since the introduction of euro cash in 2002. The key interest rate is now 1.25 percent and the so-called deposit rate at 0.75 percent.
Danger of socio-political upheavals
Inflation has eaten its way into almost all areas of life, said Nagel.
"We're still a long way off with interest rates where interest rates will match the inflation rate we're going to target," he said.
The ECB is targeting two percent inflation as the ideal value for the economy.
In August, however, inflation in the euro area was more than four times as high at 9.1 percent.
"Inflation always has a social dimension, that's why it's so dangerous," said Nagel.
It is dangerous as far as competitiveness is concerned, it is dangerous as far as growth prospects are concerned.
However, a quick solution cannot be promised.
Nagel commented positively on the federal government's relief measures: "From the Bundesbank's point of view, the federal government's third relief package is very helpful," he said.
It starts where help is most needed.
In view of the sharp rise in energy prices, the federal government has put together a new relief package of at least 65 billion euros to support the population and companies.
The volume is more than twice as large as that of the first two relief packages with a total of 30 billion euros.
beb/Reuters
