ECB’s Nagel: Monetary Policy Entering Restrictive Territory, but Still Work To Be Done

10 May 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Wednesday said that the ECB’s monetary policy was entering restrictive territory and that further tightening was needed.

In an interview with German national radio channel Deutschlandfunk, Nagel, who heads the German Bundesbank, said that ‘in fact we may then be in the home stretch in the sense that we are entering the area of monetary policy that can be described as restrictive.’

In mid-February, Nagel had said, ‘From today's perspective, I don't see that we are in restrictive territory. I can't tell you yet where restrictive territory will be. That will clearly depend on how the new projection figures look and how we come into the next meeting.’

That gave way following the 16 March Council meeting to an admission that monetary policy was finally getting there. ‘There’s still some way to go, but we are approaching restrictive territory’, he said then.

On Wednesday, Nagel noted the ‘first signs’ of tighter lending conditions.

‘There is still work to be done on the core inflation rate, but I am confident that monetary policy will have an effect’, he said. ‘We are ... not finished with the rate hikes. There's still work to be done, and we just have to be persistent here.’