Stronger rate hikes could become necessary if ECB falls behind the curve

“The risk of inflation expectations becoming de-anchored has risen over the past months,” European Central Bank (ECB) Governing Council member and German central bank head Joachim Nagel said on Thursday, as reported by Reuters.

“If monetary policy falls behind the curve, even stronger hikes in interest rates could become necessary to get inflation under control,” Nagel further added. “This would create much higher economic costs.”

Market reaction

The shared currency stays on the back foot after these comments and the EUR/USD pair was last seen losing 0.45% on a daily basis at 1.0518.

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