Joachim Nagel, Bundesbank president and European Central Bank policymaker, prepares for an interview at the Jackson Lake Lodge in Jackson Hole, Wyoming, where the Kansas City Fed holds its annual economic symposium, August 24, 2023. REUTERS/Ann Saphir/File Photo Acquire Licensing Rights
MILAN, Nov 22 (Reuters) – Euro zone interest rates are close to their peak in the current cycle or may have already reached it, European Central Bank Governing Council member Joachim Nagel said on Wednesday, adding data would determine whether they needed to rise further.
Addressing high-school students at a conference organised by the Osservatorio Giovani Editori think-tank, Nagel also said he was “sceptical” about the risk of a ‘hard landing’ for the euro zone economy caused by the monetary policy squeeze.
The Bundesbank head had said earlier at the same conference that he was cautiously optimistic about the bloc’s growth outlook, with the situation improving more markedly from 2025.
“The good news here is that inflation is coming down,” he told the audience when a student asked whether the ECB was not concerned that its string of rate hikes were harming businesses.
Speaking in English, Nagel said inflation was “a greedy beast” and the ECB was on track to bring it down, getting close to its 2% target over the course of the next 12-15 months.
“If there are more [rate hikes] to expect?,” he said. “I do not know … it’s data driven … for sure we’re close to where I see the terminal rate.”
Nagel cautioned that there were still risk factors that could trigger another bout of inflation, calling it “a bumpy road”.
The ECB snapped a streak of 10 straight rate hikes last month and investors now expect the bank’s next move to be a cut, perhaps as soon as in April.
Reporting by Valentina Za, Writing by Keith Weir, editing Federico Maccioni
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