Herkenhoff: ECB can continue to ‘wait and see’ on interest rates

“The decision of the European Central Bank (ECB) to leave its key interest rates unchanged is understandable, particularly in view of the rise in capital market interest rates across the euro area,” said Heiner Herkenhoff, CEO of the Association of German Banks.

“With its two interest rate increases in June and September, the ECB has given itself some breathing room. It can now wait and see how inflation and the economy develop over the coming weeks.”

New inflation projections for the euro area will be available for the next monetary policy meeting of the ECB’s Governing Council on 17 December. They will provide an important basis for the ECB’s future monetary policy decisions.

“Fiscal policy urgently needs to support monetary policy. In particular, euro-area countries with high structural budget deficits need to show how they intend to reduce them over the coming years,” said Herkenhoff. Experience shows that this can only be achieved through structural economic and spending reforms. And Germany is no exception.