The European Central Bank (ECB) will be required to continue raising interest rates if the current trend in consumer prices continues, according to Bundesbank president Joachim Nagel.

“Thursday’s step was a clear sign and if the inflation picture stays the same, further clear steps must follow, Nagel said in a radio interview on Sunday. He declined to comment on the size of such moves, saying the central bank is data dependent.

The ECB tightened policy by a historic 75 basis points last week and officials are prepared to deliver another jumbo interest-rate increase at their October meeting if the inflation outlook warrants an additional big step, according to people familiar with the debate.

Inflation may peak at more than 10 per cent in December, said Mr Nagel, who’s headed the German central bank since January and is among the more hawkish members of the ECB’s rate-setting Governing Council.

“In the course of 2023, the inflation picture is likely to weaken somewhat, he said. Still, the rate “is likely to be at a far-too-high level of over 6 per cent.”

Speaking in a separate interview on Dutch television, ECB Executive Board member Frank Elderson said more hikes will come as “it’s very important that the expectations that the people have on how the inflation will develop in the medium to long term will not become unanchored.

“It is vital that people and companies or actors in the economy in general maintain their trust that we as the ECB will reach our of target of 2 per cent inflation, Mr Elderson said.

Raising rates to fight inflation pressures may become more difficult if the region goes into recession, though Mr Nagel said his clear challenge is “getting the inflation development under control again — and that is a shared belief within the ECB council, in my opinion.

While there “currently are some indications that the economy could stagnate or even contract in the second half of 2022 and that this trend could continue into next year, any recession may be shallow, according to Mr Nagel.

“In the end, stable prices are much more important for medium-term, long-term growth, for a good outlook for the euro area, he said. “We may need to overcome a dry spell, but for now at least it looks like this dry spell and the decline in economic output will not be severe. — Bloomberg L.P.