ECBs Nagel: ECB cannot be lenient with structural inflationary forces

ECBs Nagel is on the wires saying:

• Cannot be lenient with structural inflationary forces.
• Greater supply chain resilience, which comes at a cost, looming labor shortages amid a demographic decline, and the green transition could all put upward pressure on prices
• To improve resilience, some form of de-risking seems reasonable
• Should keep in mind that greater security for supply chains is likely to come with some additional price pressures.
• These potential that Germany’s labor force will decline by 80,000 per year from 2026 putting upward pressure on wages and thus prices.
• Says that these inevitable changes should not increase easy B’s tolerance for inflation which is now targeted at 2%.
• If there is more price pressure in the medium-term, ECB must take action against it.

Comments from Nagel are cautionary especially in the longer term

This article was written by Greg Michalowski at www.forexlive.com.