High inflation could linger despite Iran war ending, ECB’s Nagel says
Joachim Nagel, President of the Bundesbank, Germany’s central bank, speaks with members of the Association of Foreign Journalists on April 23, 2024 in Berlin, Germany.
Michele Tantussi | Getty Images
Inflation risks remaining above target even as the United States and Iran agree to end their war in the Middle East, a senior European central banker warned on Tuesday.
Speaking to CNBC’s Annette Weisbach during the European Central Bank Central Banking Forum held in Sintra, Portugal, Bundesbank President Joachim Nagel said that inflation is “likely to remain at a high level.”
“The energy price shock is still in the system. I suspect the inflation rate will remain significantly above our target,” he said.
US President Donald Trump said on Monday that delegations from Washington and Tehran will meet in Doha, Qatar, on Tuesday, as the fragile ceasefire between the two sides will be put under pressure due to clashes over the weekend.
Earlier this month, the ECB raised its key interest rate for the first time since 2023, citing inflationary pressures from the US-Iran war.
Nagel said on Tuesday that the interest rate hike was the right decision, but that it was too early to make a decision on the course of monetary policy as uncertainty about the situation in the Middle East still persists.
“Now we have to wait, the situation is still very uncertain,” he said. “Is the situation in the Middle East stable or not? We don’t know. There are peace talks, there are 50 more days, there are less, then we will see how reliable this whole situation is.”
