Bundesbank President Nagel says the possibility of the European Central Bank raising interest rates is increasing.
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"I still hold some hope for a significant easing of tensions in the Middle East — but we cannot ignore the high energy prices," the Bundesbank President said in an interview. "The possibility of an interest rate hike is increasing, unless there is a fundamental change in the inflation situation." Economists are betting that the European Central Bank will raise interest rates twice this year, in June and September, with markets expecting a third increase before the end of the year. "We are no longer in the baseline scenario of the Eurosystem's forecast, but are instead moving towards an adverse scenario," Nagel said. He was referring to the different growth and inflation paths outlined by the European Central Bank in March. He also warned, "We may still face considerable inflation in the future."
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