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Nagel Stresses Inflation to "Significantly" Top 4% This Year

ECB
  • In an interview with Die Zeit, new Bundesbank chief Nagel stated that he expects German inflation to rise "significantly" above 4% this year, and if the inflation picture does not change by March, he will advocate for a normalization of monetary policy. Nagel again stressed that the economic costs of acting too late are significantly higher than acting early.
  • Full Nagel appearance in Die Zeit here: https://www.zeit.de/2022/07/joachim-nagel-infation...
  • The EUR gained modestly on the back of the release, with EUR/USD showing to a new session high of 1.1434, while Bund futures edged off the earlier highs.
  • Markets continue to increase the pricing of a rate rise as soon as the ECB's March meeting, although this remains an outside bet for now, with circa 4-5% probability. OIS markets currently price the first full rate hike by July's Governing Council.

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