In view of the persistently strong inflationary pressure, Bundesbank President Joachim Nagel does not rule out further significant interest rate hikes in the euro area after March. It seems to be emerging that core inflation, which excludes volatile energy and food prices, will remain at a very high level beyond March and decline only slowly, Nagel said on Friday at the G20 meeting in Bangalore. "That's why I don't rule out the possibility that further interest rate hikes, significant interest rate hikes, will have to be necessary beyond March," Nagel said at the joint press conference with Federal Finance Minister Christian Lindner.
Core inflation rose to 5.3 percent in January from 5.2 percent in December and 5.0 percent in November. This worries many monetary watchdogs. For the upcoming interest rate meeting in March, ECB President Christine Lagarde has already held out the prospect of a further sharp interest rate hike of 0.50 percentage points. What will come after that and how far the ECB will raise interest rates, however, is still unclear.