ECB’s Nagel: Better to Follow Gradual Approach to Cutting Interest Rates

23 February 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Friday said that a gradual approach to cutting interest rates would be better.

In an interview with Bloomberg TV, Nagel, who heads the German Bundesbank, said, ‘When we’re talking about financial markets, it’s often better to do things like that in a gradual manner. I think a gradual approach, often in a theoretical understanding, has a better outcome.’

The decision to cut interest rates required more data on wages and profits, he said, arguing that lowering official borrowing costs too soon was a mistake to be avoided as it could require more painful action in the future.

The recent shift in markets pricing of interest rate cuts from spring to June was welcome. ‘I’m more comfortable about that’, he said.

He denied the existence of a relation between the respective decisions of the US Federal Reserve and the ECB to cut interest rates.

‘We’re doing monetary policy for the Eurozone’, he said. ‘So I have to look what the numbers tell me in the Eurozone.’