Bundesbank chief Joachim Nagel stresses vigilance on inflation but says it is premature to signal further ECB rate increases.
European Central Bank policymaker Joachim Nagel stated the bank must remain vigilant on inflation but refrained from signaling further rate hikes. He described June’s rate increase as unavoidable, citing persistently high inflation in the ECB’s forecasts.
Nagel highlighted geopolitical risks, including Middle East tensions and oil price volatility, as key factors influencing the ECB’s reaction function. He also noted German recession risks, which may temper aggressive tightening expectations despite core inflation remaining above target.
Markets are likely to focus on incoming wage and services inflation data ahead of the next ECB meeting, as forward guidance remains cautious. The ECB will base its decision on full data review, adopting a pragmatic approach.