ECB’s Nagel: Must neither Commit to a Further Rate Step nor Rule It Out

9 July 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Wednesday that it would not be appropriate for policymakers to promise or exclude further easing.

In a speech at the 10th Bundesbank IAW Lecture, Nagel, who heads the German central bank, said that the ECB was ‘in a good position to respond to further developments’ and that it would be ‘unwise to commit to a certain interest rate path, to envisage a further step or indeed, to rule it out.’

The ECB's current monetary policy stance was neither tightening nor stimulating the economy, he said.

The projection of 2% inflation for 2025 was ‘good news’, he said.

That inflation was seen at 2% in the medium term, as projected by the ECB, was ‘even more encouraging’, according to Nagel, who said that the expected undershooting in 2026 was due to ‘base effects’.

‘Services inflation, which continues to be elevated, still warrants caution’, he said. ‘Encouragingly, though, it has eased significantly in recent months. And based on the latest data on wage developments, price pressures in the services sector are expected to decline further.’

Inflation developments could become more volatile in general in the future, he said.

‘I am afraid that heightened uncertainty will become the new normal’, he said. ‘And a number of structural developments suggest that price pressures will remain elevated over the medium term.’