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Bundesbank's Nagel: Rates Still Expansionary, Initiate QT At Start Of 2023

ECB

Bundesbank's Nagel sounding typically hawkish in a speech totay, calling for QT to start "at the beginning of next year". Like Fed's Bullard yesterday, we even get a Taylor Rule reference in his speech. Unlike Bullard, not much of a hawkish reaction to Nagel's comments.

  • "We must resolutely raise our key rates further and adopt a restrictive stance...we cannot stop here. Further decisive steps are necessary."
  • Says current rate level "cannot ensure a timely return of inflation to our 2% target." And he considers discussion over whether the ECB has reached restrictive territory "premature". Various measures suggest rates are currently "expansionary", including the Taylor rule.
  • "In abnormal times with inflation in double digits, a mere normalisation of monetary policy might not be enough... If we don’t act decisively now, we run the risk of having to tighten monetary policy all the more later."
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Bundesbank's Nagel sounding typically hawkish in a speech totay, calling for QT to start "at the beginning of next year". Like Fed's Bullard yesterday, we even get a Taylor Rule reference in his speech. Unlike Bullard, not much of a hawkish reaction to Nagel's comments.

  • "We must resolutely raise our key rates further and adopt a restrictive stance...we cannot stop here. Further decisive steps are necessary."
  • Says current rate level "cannot ensure a timely return of inflation to our 2% target." And he considers discussion over whether the ECB has reached restrictive territory "premature". Various measures suggest rates are currently "expansionary", including the Taylor rule.
  • "In abnormal times with inflation in double digits, a mere normalisation of monetary policy might not be enough... If we don’t act decisively now, we run the risk of having to tighten monetary policy all the more later."