ECB's Nagel says the higher inflation goes and the longer expectations stay above target, the greater the second round risks become
- ECB must act when second round effects on inflation become apparent.
- Is taking a wait-and-see approach.
Context
Nagel's comments highlight the ECB's heightened concern about persistent inflation and its possible second-round effects, suggesting a shift towards a more proactive stance may be necessary. His mention of the wait-and-see approach indicates that while there's recognition of the inflation risks, immediate action may not be forthcoming, potentially impacting market expectations around interest rates and economic outlook in Europe.
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