Central banks are charged with protecting the purchasing power of their currencies. This means keeping consumer prices, as measured by the relevant price indices, at a low – affordable – level. In fact, keeping inflation at bay is the primary purpose of the European Central Bank, as laid down in the European Treaties. That is, the European Central Bank's (ECB) mandate is constitutionally defined. However, the overall price-level (as measured, in the case of the euro area, by the Harmonized Consumer Price Index, HCPI) rose abruptly and very substantially, since 2020. It is currently running at almost 9 percent. Of course, this is to a substantial degree the upshot of developments in energy and commodity markets. But even after excluding the volatile components, core inflation is above 4 percent, very substantially beyond the ECB’s objective of 2 percent. This comes with serious consequences, differing across euro area member states as well as between household income categories. Those at the lower end are particularly affected by cost-of-living crises.
Examples of questions this seminar will address are: What are the most effective ways to regain stability in purchasing power of households? Why is there a need to safeguard central bank credibility? What should the ECB do to prevent, in the current context, inflation from derailing?
The Minda de Gunzburg Center for European Studies (CES) is honored to host Joachim Nagel to talk about the issues and questions above. Prior to his role at the Deutsche Bundesbank, Nagel served in several senior roles: Member of the Executive Board of the Bank for International Settlements, the Member of the Board of Management of KfW, a major international development bank – and before that he was on the Executive Board of the Deutsche Bundesbank.