ECB’s Nagel: Policymakers Should Avoid Giving Rate Outlook Too Far Ahead

23 June 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Monday that policymakers should avoid giving an interest rate outlook too far ahead.

In a speech at the 20th Walter Eucken Lecture in Freiburg im Breisgau, Germany, Nagel, who heads the Deutsche Bundesbank, said that ‘uncertainty is exceptionally high’ and that this was the reason why the ECB was ‘currently more data-dependent than ever’.

‘Therefore, if you were hoping for a detailed interest rate outlook from me, I regret to disappoint you’, he added.

In very uncertain times like these, ‘central banks should not claim to be able to see far into the future’, he said, while calling for his colleagues to keep their rate outlooks ‘correspondingly short-term at the moment.’

It was ‘likely’ that the ECB’s monetary policy was currently within the neutral range, according to Nagel, who said that these estimates were highly uncertain.

‘Due to this high degree of uncertainty, it would be risky to base decisions solely on the natural interest rate’, he said. ‘Consequently, we always rely on a wide range of real and financial indicators along the entire monetary policy transmission chain.’

The ECB was ‘in a good position with regard to interest rates’ in order to wait and see new developments in inflation, he said.

Apart from the Middle East crisis, the biggest source of uncertainty for the ECB’s monetary policy path was trade policy, he said.

‘Not only is it unclear how strong the effects could be, but it is ultimately even uncertain whether the US trade policy will have an inflationary or disinflationary effect on the euro area’, he added.