2023-06-22 18:38:00
“For me, inflation is like a greedy beast. And we have to fight this greedy beast,” said Joachim Nagel, head of the Deutsche Bundesbank, at an event marking 60 years of the German Council of Economic Experts in Berlin. He sees the European Central Bank (ECB) on the right track. He is confident that inflation will return to the 2% target. “But there is still a long way to go.”
The currency guardians would have to remain persistent, since the rise in prices was also persistent. From the point of view of the German central banker, it would be a cardinal mistake to end the fight too early. At the same time, he emphasized that he did not see any credit crunch as a result of higher interest rates. The transmission of monetary policy to the economy is a normal process. In view of the high inflation, it was right that the ECB slowed down economic development with its tighter course. Nagel recently said that interest rates might have to be raised after the summer break.
On Thursday, several other central banks raised their key interest rates in the fight against inflation. The Bank of England (BoE) accelerated the pace and surprisingly increased the key interest rate sharply. The monetary authorities raised the key monetary policy rate by half a point to 5.0 percent. Norway’s central bank also surprisingly increased its key monetary policy rate by 0.5 percentage points to 3.75 percent. The Swiss National Bank (SNB) increased the key interest rate by 0.25 percentage points to 1.75 percent.
Turkey’s central bank governor Hafize Gaye Erkan Photo: APA/AFP/TURKEY CENTRAL BANK/HANDOUT
Türkiye almost doubles key interest rate
The Turkish central bank is changing course in monetary policy with its new boss, Hafize Gaye Erkan, who was trained in the USA, because of the persistently high inflation of currently around 40 percent and currency turbulence. The central bank announced that the key interest rate would be raised from 8.5 to 15.0 percent.
Economists had even expected a larger step to 21.0 percent. Before the recent political elections, which President Recep Tayyip Erdogan ultimately won again, Turkey had even lowered interest rates.
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