MNI BRIEF: ECB Should Pick Up QT Pace From Summer, Nagel says

Euro area inflation is expected to remain above-target into next year, Bundesbank President Joachim Nagel said Monday, before reaching 2% in early 2025. But he did not say whether he would like to see further ECB interest rate rises, and instead suggested the ECB can afford to substantially step up the currently “cautious” pace of balance sheet reduction in Q3 by further slowing APP reinvestments.

"In my opinion, (tapering APP reinvestments) can be accelerated from the summer," he said. "The markets can take it well. And in terms of monetary policy, it is necessary to reduce the balance sheet of the Eurosystem more quickly."

The ECB's Governing Council has reacted “resolutely” to high inflation by raising interest rates by 350bps in nine months, Nagel added in a speech (in German) to insurers Monday. Nagel did not mention Deutsche Bank specifically, amid shareholder concern over the health of the German giant. But he said the German financial system “as a whole has proven to be resilient despite the turbulence on the financial markets.”