ECB’s Nagel States Inflation Has Not Been Defeated Yet, According to Reuters

FRANKFURT (Reuters) – The European Central Bank (ECB) needs to maintain elevated interest rates for an extended period, as inflation in the euro zone remains a concern despite a notable decline over the past year, according to ECB policymaker Joachim Nagel.

"Our tight monetary policy is effective, but we must not ease off too soon," emphasized Nagel, who is also the president of the Bundesbank, in prepared remarks for an economic think-tank event in Berlin. "In fact, the key interest rates should stay at a sufficiently high level for a sufficiently long time."

Nagel noted that it is premature to determine whether interest rates have peaked, despite some of his colleagues expressing optimism that last month’s increase would be the final one and one even suggesting a potential rate cut next year.

According to recent data, prices in the euro zone rose by just 2.9% in October, marking the slowest increase since July 2021. Additionally, a measure of inflation that excludes energy, food, alcohol, and tobacco also showed a decline.