The possibility of further fragmentation of the world , which could put central banks ahead of new challenges in the form of higher or more unstable inflation , is seen by Joachim Nagel, a member of its Board (EKT) and chairman of the Bundesbank. According to a report in Bloomberg, the ECB member said today (18.11.2024) in Tokyo: “The first signs of geo-economic fragmentation are becoming increasingly evident – and unfortunately, we may be on the verge of significant escalation,” and he added that “this is a worrying development and we should all try to restore cooperation and free trade.” If international tensions are reinforced, this could lead to greater inflationary pressures or increased volatility in consumer price increases and central banks should probably react at higher interest rates, Nagel said. “We can and will do what is necessary to maintain price stability”. Bundesbank’s president has repeatedly warned that Donald Trump’s re-election heralds an era of protectionism and threatens to fragmentation the global economic order. The Republican president-elect of the US has, among other things, committed itself to imposing 60% tariffs on China and up to 20% on everyone else, raising fears of total trade wars.
Nagel (ECB): The risk of economic fragmentation escalates
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