ECB will have to reduce bond holdings in foreseeable future, Nagel says

BERLIN (Reuters) – The European Central Bank will have to reduce its bond holdings in the foreseeable future and the next ECB meetings must send out clear signals that inflation will be countered, Bundesbank President Joachim Nagel said on Friday.

“We must implement our monetary policy robustly. In the foreseeable future, the Eurosystem will also have to reduce its bond holdings,” Nagel said in a interview with newspaper Sueddeutsche Zeitung .

Nagel said Germany’s economic output will probably see a slight decline in economic output as early as the third quarter this year which will likely intensify in the fourth quarter and continue in early 2023.

“But at the moment I assume that it will not be a deep slump. The labour market is also currently very robust,” he added.

Germany’s 2023 inflation will likely be 6% or more, above the 5.5% inflation forecast for the Euro Zone, he said.

(Reporting by Riham Alkousaa; Editing by Ludwig Burger)