FRANKFURT (Reuters) – The European Central Bank must act decisively to prevent inflation expectations from rising far above its 2% target, ECB policymaker Joachim Nagel said on Thursday, reaffirming his call for more interest rate increases.
“Decisive monetary policy action is necessary to reduce the risk of an unanchoring of long-term inflation expectations,” Nagel, the Bundesbank’s president, said in a slide accompanying a speech.
Economists’ and investors’ expectations for inflation in the euro area from 2025 onwards are at or just above 2% but the ECB has said it will monitor the situation in case there is any further rise.
The central bank for the euro zone raised interest rates by half a percentage point last week and pencilled in a move of the same magnitude for next month.
But it kept options open for its following meeting in May, with sources telling Reuters they expected a 25- or 50- basis-point increase then.
(Reporting By Francesco Canepa; Editing by Christina Fincher)
