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MNI: EU States Must Prepare For NIRP Exit - Buba's Nagel

(MNI) London

The overall number of interest rate hikes undertaken by the European Central Bank this year “remains to be seen,” Bundesbank president Joachim Nagel said in a speech Wednesday, although he believes negative interest rate will be history in the euro area “relatively soon” following swift and smooth exit from very accommodative monetary policy.

Having acted in concert during the Covid-19 pandemic, the interplay between monetary and fiscal policy could now change in high of rising inflation and the challenge of mitigating the distributional implications of rising energy and commodity prices, amid a slowing recovery and already diminished fiscal buffers, Nagel said.

"Governments and financial markets alike have to prepare for rising interest rates," he said, at a time when EU officials are debating extending looser rules on EU member states' public borrowing (MNI: Easier Debt Rules Would Ease Calls For NGEU2-EU Officials).

MNI London Bureau | +44 20 3983 7894 |
MNI London Bureau | +44 20 3983 7894 |

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