Joachim Nagel: Monetary policy in times of multiple challenges

Keynote speech by Dr Joachim Nagel, President of the Deutsche Bundesbank, at the annual reception of the Association of German Pfandbrief Banks (vdp), Berlin, 30 November 2023.

Central bank speech  | 
06 December 2023

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1 Introduction

Ladies and gentlemen,

Many thanks for your invitation and your kind welcome. It gives me great pleasure to be with you today.

Tomorrow, it will already be time to open the first door of our advent calendars. The run-up to Christmas is a relaxed and peaceful time for some, with activities such as visiting a Christmas market or baking biscuits. For others, however, it involves more stress. For many, as the turn of the year approaches, it is also a time to reflect on the year that is coming to a close and to think about the year to come.

Here at today's annual reception, I would like to join you in looking back on monetary policy in 2023 before looking ahead to 2024. And, as the title of my speech suggests, we will address "multiple challenges".

2 Key challenge: excessively high inflation

Of the many challenges facing the Eurosystem's monetary policy, one is clearly key: inflation in the euro area has been too high for far too long. We in the Governing Council of the ECB must fulfil our mandate. We need to bring inflation back in line with our target of 2% over the medium term.

Developments observed over the past few months are encouraging: in September and October, inflation eased substantially – both in Germany and in the euro area. According to preliminary estimates, inflation rates as measured by the Harmonised Index of Consumer Prices fell further in November, down to 2.4% in the euro area and 2.3% in Germany. By comparison, they had peaked in October of last year at 10.6% and 11.6%, respectively.