© Reuters. FILE PHOTO: Joachim Nagel, President of Germany’s federal reserve Bundesbank addresses the media throughout the financial institution’s annual information convention in Frankfurt, Germany March 1, 2023. REUTERS/Kai Pfaffenbach

(Reuters) – Eurozone policy-setters have to be “cussed” and proceed growing borrowing prices to battle inflation, Bundesbank chief Joachim Nagel instructed the Monetary Instances in feedback printed on Wednesday.

The remarks got here after the European Central Financial institution raised rates of interest final week by 50 foundation factors, maintaining its combat on inflation, amid calls by some buyers to carry again on coverage tightening till turmoil within the banking sector eased.

“Our combat towards inflation just isn’t over,” Nagel instructed the newspaper, including that he actually felt “worth pressures are robust and broad-based throughout the financial system.”

“There’s nonetheless some approach to go, however we’re approaching restrictive territory,” he mentioned, including that after the ECB stopped elevating charges it might have to withstand calls to chop them. 

Nagel mentioned it was attainable for European banks to turn into extra cautious in lending following the turmoil.

However he dismissed issues it might have an effect on them, saying it was “too early” to conclude the area was heading for a credit score crunch.

The turmoil was triggered by the collapse of U.S. midsized lenders Silicon Valley Financial institution and Signature Financial institution (NASDAQ:), rapidly ensnaring Credit score Suisse as buyers fretted about different ticking bombs within the banking system.