Bundesbank President Joachim Nagel said a December interest-rate increase was “rather obvious,” FXStreet reported, as euro-area inflation accelerated in October ahead of the European Central Bank’s next policy meeting.
Eurostat’s Nov. 4 flash estimate put annual inflation at 4.0% in October, up from 3.8% in September. Annual energy inflation was estimated at 20.8%, compared with 18.9% a month earlier. Full October data are scheduled for Nov. 18.
FXStreet reported that Nagel made the comment during an interview with Bloomberg Television and welcomed lower energy prices after the U.S. midterm elections. The outlet also reported that he said the ECB would do what was needed to return inflation to its 2% target.
At its Oct. 29 meeting, the ECB kept all three key interest rates unchanged. The deposit facility rate stood at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90%.
The ECB said it would base each decision on incoming data and has not set a predetermined rate path. It also identified energy prices as a risk that could push inflation higher while weighing on growth. Nagel’s comments reflect his view; the Governing Council has not announced a December rate increase.
The remark follows EconoTimes’ earlier coverage of Nagel’s December rate outlook. Eurostat’s full October inflation release is due Nov. 18. The ECB’s next policy meeting is scheduled for Dec. 16–17, with a press conference on Dec. 17.
