Overview
On Monday, Joachim Nagel, President of the Deutsche Bundesbank, stated that German inflation remains excessively high and that the European Central Bank (ECB) will not achieve its 2% target until 2025.
Nagel further noted that the ECB has ceased purchasing government bonds and is cautiously decreasing its securities holdings by €15 billion per month.
Given the ECB’s current bond portfolio of approximately €5 trillion, Nagel advocated for an acceleration of quantitative tightening, which he believes the markets can handle.
Nagel argued that swift reduction of the Eurosystem’s balance sheet is necessary from a monetary policy perspective.