ECB’s Nagel: We Shouldn’t Speculate on Interest Rate Path or Rush Into More Cuts

25 February 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Tuesday that the ECB had room to keep cutting interest rates, but urged his colleagues at the ECB to refrain from openly guessing about a potential terminal rate.

During the presentation of the annual account for 2024 of the Bundesbank, which he heads, Nagel said that ‘[t]here’s nothing to be gained from publicly speculating on where we might stand, in terms of our interest rate policy, in the summer or at the end of the year.’

Given the elevated uncertainty and the most recent evolution of price dynamics, the ECB had to ‘take one step at a time’ in its decisions ‘and not rush into further interest rate cuts', he said.

However, he agreed that incoming data, especially about inflation, made it likely that the ECB would hit its 2% target in 2025.

‘This would allow us on the Governing Council to lower the key interest rates further’, he said.

The situation for inflation was ‘fairly encouraging’, he said, though he warned about persistently high core and services inflation.

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