Nagel says ECB must raise rates in December

Bundesbank President Joachim Nagel, who also sits on the ECB Governing Council, said in a Bloomberg TV interview that it is rather obvious the ECB has to raise rates in December. He said the drop in energy prices since the US midterm elections is good news. Nagel said the central bank would do what is needed to return inflation to its 2 percent target.

Energy prices and the outlook

Nagel described the fall in energy costs as a welcome development for the euro area. The ECB’s main refinancing rate stood at 2.50 percent by our market data as of 20:20 GMT on 10 November.

Nagel said market expectations matter, but he stressed they do not drive the central bank’s decisions.

Fiscal concerns

Asked about public finances, Nagel said France must look at its fiscal challenges. He said he does not see a risk of fiscal dominance, the scenario in which government borrowing constrains monetary policy.

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Source: Bundesbank  |  Data: European Central Bank