ECB’s Nagel: It will take a while to return to 2% inflation

The European Central Bank is targeting 2% inflation and Bundesbank President Joachim Nagel said ”it will take a while to return to 2% inflation.”

Earlier in December, Nagel was quoted saying that the ECB should start reducing its large holdings of government debt in the first quarter of next year as part of its fight against high inflation.

Quantitative tightening should be done by not replacing all the bonds that mature, rather than through outright sales, Nagel said in a speech.

This approach would allow bond yields to rise, ease a collateral shortage in the market and underline the ECB’s determination to reduce inflation, Nagel argued.

So long as the EUR/USD traders guard a break of the 1.0650s, then the focus will be on a test of the dominant bullish trendline that remains intact. On a break of 1.0650, however, the 1.0700s will be the focus.