Bundesbank promotes policy normalization to fight inflation – POLITICO

FRANKFURT – Germany’s central bank expects domestic prices to rise 5% in 2022, raising its December estimate of a significant 3.6%, it said. announced today.

High inflation in the broader euro area is reason for the European Central Bank to normalize its ultra-loose monetary policy, the central bank added.

“The Bundesbank experts now believe that the inflation rate could average 5% over the year,” Bundesbank head Joachim Nagel said in a statement. “The euro area is also expected to record high rates of inflation. We need to exercise our vision of normalizing our monetary policy. “

Inflation in Germany hit 5.1% in February after hitting 4.9% the previous month, in both cases above expectations. In particular, energy prices have contributed to the price increase, a development that could persist further when Russia attacked Ukraine last week. euro area data shows prices rose to 5.8 percent from 5.1 percent the previous month.

The Bundesbank also said that it would not transfer any profits from interest payments to the country’s Finance Ministry and said it had reserved an extra €1.3 billion in risk provisions. Bundesbank promotes policy normalization to fight inflation - POLITICO

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