MNI BRIEF: End ECB APP In June, Hike In July - Buba's Nagel

Bond buying under the European Central Bank’s asset purchase programme should end in June with the central bank's first rate hike in a gradual, data-dependent process of monetary policy normalisation coming in July, the head of Germany’s Bundesbank said in a speech Tuesday. Joachim Nagel, who also sits on the ECB's Governing Council, warned that the risks of slow a response to rising inflation -- such as higher negotiated wages -- are increasing notably.

“Given the extraordinarily high uncertainty surrounding the future path of inflation, we should not delay the exit from the very accommodative monetary policy, since a less expansionary monetary policy stance provides the most flexibility,” Nagel said.

“In the current situation, it is therefore more important than ever that central banks act in time. Their action should be foreseeable, gradual, and data-dependent. This way, debtors can better cope with an increase in interest rates, and accordingly, risk premia are expected to rise to a limited extent.”