MNI BRIEF: Inflation To Climb Above 3% Then Fall Back - Nagel
ECB is is still A "considerable distance" from 2% target, with monetary policy transmission "making progress," Buba chief says.
Eurozone headline inflation will return to a level above 3% with the ECB “still a considerable distance” away from its target level, Bundesbank president Joachim Nagel said in a speech Tuesday.
“We expect a bumpy road ahead, with ups and downs in inflation over the near future,” Nagel said. “In October, the inflation rate was slightly below 3% for the first time since July 2021. But we will see a return of numbers with a three before the decimal point. This is largely the result of a base effect.”
Nagel repeated his recent assertion that Europe's economy faces a period of "pronounced weakness," and said he took note of concerns that the current monetary policy stance might be too restrictive for the economy. But he said he was not convinced that lower rates would allow for better growth without jeopardising price stability. “It could do more harm to the economy if we were to loosen too early and then have to tighten again and even more strongly,” he said.