making Thursday\u2019s increase in the deposit rate <\/a>necessary even if the situation moderates quickly, the Bundesbank president said. High energy costs are having repercussions for other prices and are affecting core inflation, he said.<\/p>\n\u201cThe Governing Council will be gathering for its next monetary-policy meeting in July,\u201d Nagel said in emailed comments on Friday. \u201cWe are keeping all our options open and are ready to respond once again, should we have to. Our data-dependent and meeting-by-meeting approach to making decisions remains appropriate.\u201d<\/p>\n
The German official spoke less than a day after the ECB raised borrowing costs for the first time since 2023, becoming the first major central bank to react to the inflation caused by the Iran war.<\/p>\n
The consequences of the conflict are becoming clear in Europe, where consumer prices advanced by more than 3% in May and business activity is sinking. ECB President Christine Lagarde warned on Thursday that the energy shock is \u201cbroadening\u201d through the economy.<\/p>\n
Markets expect she and her colleagues to deliver two more quarter-point hikes to contain the jump in prices. Another move could come as soon as July if the situation doesn\u2019t improve in the meantime, according to people familiar with the situation.<\/p>\n
Whatever the timing, further tightening will be required to control prices, the International Monetary Fund said just hours after the ECB hiked.<\/p>\n
\u201cThe policy rate will need to rise to keep the impact of the shock on inflation contained,\u201d IMF staff said. The fund\u2019s outlook assumes a cumulative increase of 50 basis points this year, addressing the danger of both headline and core inflation topping 2% into 2028.<\/p>\n
The ECB\u2019s own quarterly forecasts this week indicated quicker gains in consumer prices over the next two years, with economic growth taking a hit as demand sags.<\/p>\n
Nagel said the price outlook had \u201cworsened further\u201d and that the shock is proving to be \u201cstrong and persistent.\u201d<\/p>\n
\u201cThat is why we cannot simply \u2018look through\u2019 it,\u201d he said. \u201cThe interest-rate step would be necessary even if the situation eased quickly.\u201d<\/p>\n
In a separate interview, Governing Council member Primoz Dolenc said that Thursday\u2019s hike enables the ECB to \u201cdo the thinking of the broader environment in the next meetings.\u201d<\/p>\n
\u201cIt\u2019s just enough for now to follow our main path,\u201d he told Bloomberg Television.<\/p>\n
His Estonian counterpart, Ulo Kaasik, was similarly reserved, saying its \u201cextremely difficult\u201d to say when the ECB would next hike borrowing costs.<\/p>\n
\u201cThere\u2019s a lot of uncertainty,\u201d he said. \u201cThe reason we raised them this time and didn\u2019t raise interest rates last time, for example, was that there has always been a hope that maybe this conflict would be resolved.\u201d<\/p>\n
Speaking on Estonia\u2019s Aripaev radio, Kaasik stressed that \u201cif you look at it more realistically, you know that inflation risks are more to the upside.\u201d<\/p>\n
Austrian Governing Council member Martin Kocher said in a statement that the ECB will \u201ccontinue to act decisively\u201d to meet its 2% medium-term price target.<\/p>\n
\u201cIt will be crucial that the current price shock does not become permanently entrenched in inflation expectations and thus in general price trends,\u201d he said. \u201cThe decision yesterday to raise key interest rates contributes to stabilisation.\u201d \u2013 Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"The European Central Bank (ECB) is prepared to raise interest rates for a second straight meeting next month…\n","protected":false},"author":2,"featured_media":495958,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,12965,61,5232,60,16486],"class_list":["post-495957","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-european-central-bank-ecb","tag-ie","tag-interest-rates","tag-ireland","tag-joachim-nagel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/495957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=495957"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/495957\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/495958"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=495957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=495957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=495957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}