ECB’s Nagel: No Good Arguments to Change Rates in Either Direction

27 January 2026

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Tuesday that the current level of ECB interest rates was appropriate and that there were currently no good reasons to change policy in any direction.

In a joint interview with Austrian National Bank Governor Martin Kocher in German daily Frankfurter Allgemeine Zeitung, Nagel, who heads the Deutsche Bundesbank, said that he was “surprised” that some felt “confident” about making predictions regarding when the next move by the ECB would take place, adding that there are always circumstances that must be re-evaluated.

“From today’s perspective, the key interest rates are indeed at an appropriate level to ensure price stability over the medium term,” he said. “ECB Chief Economist Philip Lane recently said that he currently sees no good arguments for a change in interest rates in either direction. I can only agree with that.”

Nagel noted that when new US tariffs were announced for some European countries, long-term interest rates in the US increased sharply, but then fell back again, which he said showed financial markets are alert.

Developments like these in the US always triggered spillover effects in European markets, he said, adding that the ECB should monitor this closely for potential implications in monetary policy.

The Greenland-related US tariffs could have generated a negative impact on growth of around 0.1% of GDP in 2026 and 2027, he said, whereas the effect on inflation would have been “rather neutral.”

Inflation in Germany “could temporarily” undershoot the 2% target, he said, noting that he only expected this to last a few months.

“In the longer term, the inflation outlook is stable at around 2%,” he said. “It is good that the core inflation rate, which excludes the more volatile prices for energy and food, is now also declining noticeably.”

Asked about the hawk-dove division within the Governing Council, he said all members agree on “many points”, adding that “this ‘dove-hawk’ constellation is, in my view, overrated.”

The ECB had “a very open discussion”, he said, and all members knew decisions were taken for the sake of price stability in the euro area as a whole.