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Deutsche Bank AG Chief Executive Officer Christian Sewing said the current bout of inflation will likely prove longer lasting, adding his voice to a widening group of leaders calling on central banks to react.
“The inflation rate in the currency union is unlikely to return in the medium term to the pre-pandemic level,” Sewing said Wednesday in remarks prepared for a press briefing of the German bank lobby BDB, of which he’s the president. “The time has come to talk about a perspective of exiting the monetary policy crisis mode.”
Euro-area inflation is running at the fastest pace since 2008, propelled by energy and a number of statistical effects related to the pandemic that should fade next year. Yet persistent supply bottlenecks have fueled concerns that price pressures may remain elevated for some time, not just in Europe.
Wells Fargo & Co. Chief Executive Office Charlie Scharf said Tuesday that he’s planning for inflation “to be here for a period of time,” as staffing challenges and wage increases remain, even if supply chain issues are resolved.
The European Central Bank is preparing to unwind emergency monetary stimulus as economies in the 19-nation euro area move past the coronavirus crisis. But with medium-term inflation in the region still falling short of the 2% goal, an older bond-buying program and record-low interest rates will remain in place.
Negative interest rates “must not be a permanent tool of monetary policy,” Sewing said Wednesday. “However, we are not very optimistic about this.”
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