Joachim Nagel, President of the Bundesbank, Germany’s central bank, speaks to members of the Foreign Journalists’ Association on April 23, 2024 in Berlin, Germany.
Michele Tantussi | Getty Images
Inflation is at risk of remaining above target despite the U.S. and Iran agreeing to end their war in the Middle East, a top European central banker warned on Tuesday.
Speaking to CNBC’s Annette Weisbach on the sidelines of the European Central Bank’s Forum on Central Banking in Sintra, Portugal, Bundesbank President Joachim Nagel said there is a probability inflation “will stay at an elevated level.”
“The energy price shock… is still in the system. I suspect the inflation rate will stay significantly above our target,” he said.
U.S. President Donald Trump said on Monday that delegations from Washington and Tehran would meet in Doha, Qatar, on Tuesday, as a fragile ceasefire between the two sides came under pressure amid weekend hostilities.
Earlier this month, the ECB raised its key interest rate for the first time since 2023, citing inflationary pressures arising from the U.S.-Iran war.
Nagel said on Tuesday that the hike was the right decision, but it is too soon to make a call on the trajectory of monetary policy, with much uncertainty still lingering around the situation in the Middle East.
“Now we have to wait, the situation is still very opaque,” he said. “Is it stable or not in the Middle East? We do not know. There are peace talks, there are 50 days more or less left, then we will see how reliable this whole situation is.”
