Published by Global Banking & Finance Review®
Posted on June 16, 2025
1 min readLast updated: January 23, 2026
Add as preferred source on GoogleBundesbank President Nagel advises the ECB to remain flexible on rate policy amid economic uncertainty, with Euro zone inflation on target.
FRANKFURT (Reuters) -Euro zone inflation is now on target and no sustained undershooting is likely but the ECB should keep all of its options open for future policy moves amid exceptional uncertainty, Bundesbank President Joachim Nagel said on Monday.
The ECB has cut interest rates eight times since last June but signalled a pause in policy easing for July and markets now see just one more cut, possibly at the end of the year, taking the deposit rate to 1.75%.
But Nagel said the environment could shift so quickly that committing now to either a pause or a cut would not be sensible and that the ECB should remain flexible.
"Rather, we must keep our eyes and ears open for the risks to price stability," he told a conference in Frankfurt. "This is also true in light of current developments in the Middle East."
Nagel said he expected German economic growth to stagnate in the second quarter and predicted that the global trade war could cost Germany three-quarters of a percentage point in growth over the medium term.
(Reporting by Balazs KoranyiEditing by Bernadette Baum)
Nagel suggests that the ECB should keep all options open for future policy moves due to exceptional uncertainty in the economic environment.
The ECB has cut interest rates eight times since last June but has signalled a pause in policy easing for July.
Nagel expects German economic growth to stagnate in the second quarter and predicts that the global trade war could cost Germany three-quarters of a percentage point in growth over the medium term.
Nagel believes that the environment could shift quickly, making it unwise for the ECB to commit to either a pause or a cut at this time.
Nagel highlights the importance of being aware of risks to price stability, particularly in light of current developments in the Middle East.
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