It was reported that Bundesbank President Joachim Nagel has objected to the European Central Bank’s promise of fresh support for the bloc’s indebted south at an emergency meeting last month, reviving a divide between the ECB and its biggest shareholder.
ECB policymakers pledged to buy more bonds from debt-laden countries at an unscheduled meeting on June 15 to contain a widening spread between their borrowing costs and Germany’s as the central bank prepares to raise interest rates.
Sources said the President of the Bundesbank did not see eye-to-eye on that decision, by reasoning that the ECB’s focus should instead be on fighting high inflation.
ECB policymakers who have spoken since the meeting, including Belgium’s Pierre Wunsch and the Netherlands’ Klaas Knot, two key policy hawks, have backed President Christine Lagarde’s pledge to fight fragmentation. It indicates that Nagel’s opposition was unlikely to prove an insurmountable hurdle.
