ECB’s Nagel: See ‘Certain Probability’ of a 25BP Cut Next Week
21 January 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Tuesday that a 25bp cut could very well be the outcome of next week's monetary policy meeting.
In an interview with Bloomberg TV, Nagel, who heads the Deutsche Bundesbank, said that ‘there’s never a done deal’, but ‘based on the data we have for the next meeting, I think there is a certain probability that it could be a done deal, but we have to check the data.’
Nagel described getting to neutral by mid-2025 as something ‘achievable wherever the neutral rate is’, since inflation would likely hit target after the first half of the year.
Asked where r* was, he said he had a feeling of where it might sit but was not willing to say it out loud.
‘[W]e need some constructive ambiguity’, he said. ‘I think this is important because in the end we do not know for certain where it could be.’
The meeting-by-meeting approach had proven effective during the last two and a half years, he said, and the ECB should stick to it for the next six months.
Services inflation and wages were expected to continue slowing down in upcoming months, he said.
‘This gives us, I guess, more comfort, I believe, in the next months that we can come to the conclusion that our target is there’, he added.
The recovery in consumption expected by the ECB would eventually materialise, he said.
‘People have their concerns’, he indicated. ‘This is not good for consumption, it’s not good for investment, we need a more stable environment to really let that go.’
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