MNI BRIEF: 'Several' More ECB Rate Hikes Needed - Buba's Nagel

Several more interest rate rises will be needed before monetary policy is sufficiently restrictive to bring stubborn inflation back to the ECB’s 2% target in a timely and sustainable manner, Bundesbank president Joachim Nagel said in a speech (in German) Tuesday (see MNI SOURCES: Most At ECB See 4% Rate As Only Outside Chance).

The ECB must be prepared to take “unpopular” decisions that will inevitably dampen economic activity, he said. EU fiscal rules should not be reformed in such a way as to render them “toothless," Nagel added. (see MNI:EU In Fiscal Reform Race Before Old Rules Return-Officials).

“The current exceptionally high, stubborn inflation demands decisive action from monetary policy. And European monetary policy - despite all the prophecies of doom - has acted decisively,” he said.