ECB Governing Council and Bundesbank President Joachim Nagel said that if energy prices remain high, interest rates may need to be raised to a level that inhibits economic growth to a certain extent. Nagel said in London on Tuesday night that if faced with current high energy prices for a long time, “it is not ruled out that monetary policy must enter a mildly restrictive range,” but it is still too early to determine whether this is necessary. The ECB has raised interest rates twice, and the market anticipates that the current austerity cycle may raise interest rates up to three more times. The inflation rate in the Eurozone is currently above 3%, and is expected to remain above the ECB's 2% target in the coming year.

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