WASHINGTON (Reuters) – The core inflation rate in the euro zone will start to improve in coming months, but the European Central Bank (ECB) still has some way to go on monetary policy, it said on Thursday. Joachim Nagel, President of the Bundesbank and member of the European institution.
“We expect core inflation to show the first moves in the right direction before the summer recess,” he said on the sidelines of an International Monetary Fund (IMF) meeting in Washington.
The president of the German central bank cited encouraging inflation data from the United States which shows that central bank interest rate hikes are working.
The US Federal Reserve (Fed), however, began its monetary tightening cycle before that of the European Central Bank, noted Joachim Nagel, who pleads for a continuation of the monetary tightening of the ECB.
Joachim Nagel, however, did not commit to the scale of the expected rise at the ECB’s May meeting, merely saying: “What is clear is that monetary policy must remain firm to restore price stability in due course”.
Headline inflation in the euro zone in March showed its sharpest slowdown to 6.9% year on year, but a narrower measure, which excludes alcohol, tobacco, energy and unprocessed food , shows that it accelerated to 5.7% after rising 5.6% in February.
(Report Christian Kraemer and Frank Siebelt; Claude Chendjou, edited by Kate Entringer)
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