ECB’s Nagel: Should Wait for New Data; Maybe We Can Wait for Summer Break

15 January 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Monday said that any decision to reduce interest rates required new data.

In an interview with Bloomberg TV on the margins of the Annual Meeting of the World Economic Forum in Davos, Switzerland, Nagel, who heads the German Bundesbank, said, ‘I think it’s really much too early [for a cut], so maybe we can wait for the summer break or whatever, but I don’t want to speculate. I think this is really my understanding here: we should wait for new data.’

There was still uncertainty on the economic outlook, he said. ‘We shouldn’t forget that 2024 is coming with a lot of challenges and this will have impact on monetary policy.’

For this reason, the meeting-by-meeting approach was the best way to deal with uncertainty, he said.

‘So I want to see new data that is kicking in, so we will wait for the next Governing Council meeting and then we will see’, he said.

The fact that 2024 inflation was expected to be half of what it was last year was ‘good news per se’, but the figures were still ‘too high’, he said.

‘So for me, all the discussions regarding [rate] cuts, this comes too early’, he said.

Markets were sometimes ‘over-optimistic’ and should understand that inflation was not yet at the 2% target, he said, ‘and then they can price what they want to price.’