Nagel said it was possible for European banks to become more cautious in lending following the turmoil. But he dismissed concerns it could affect them, saying it was "too early" to conclude the region was heading for a credit crunch. The turmoil was triggered by the collapse of U.S. midsized lenders Silicon Valley Bank and Signature Bank, quickly ensnaring Credit Suisse as investors fretted about other ticking bombs in the banking system. (Reporting by Kanjyik Ghosh in Bengaluru; Editing by Christian Schmollinger and Clarence Fernandez)
(Adds details; paragraphs 2-7)
March 22 (Reuters) - Eurozone policy-setters must be
"stubborn" and continue increasing borrowing costs to battle
inflation, Bundesbank chief Joachim Nagel told the Financial
Times in comments published on Wednesday.
The remarks came after the European Central Bank raised
interest rates last week by 50 basis points, keeping up its
fight on inflation, amid calls by some investors to hold back on
policy tightening until turmoil in the banking sector eased.
“Our fight against inflation is not over,” Nagel told the
newspaper, adding that he certainly felt "price pressures are
strong and broad-based across the economy."
“There’s still some way to go, but we are approaching
restrictive territory,” he said, adding that once the ECB
stopped raising rates it would have to resist calls to cut
them.
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