Finance
ECB can take time on policy, policymaker Nagel says
Published by Global Banking & Finance Review®
Posted on June 8, 2025
1 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 8, 2025
1 min readLast updated: January 23, 2026
ECB's Joachim Nagel states interest rates are at a neutral level, allowing for cautious future policy adjustments.
FRANKFURT (Reuters) -The European Central Bank can take its time on interest rates with monetary policy now set at a neutral level that is no longer restrictive, ECB policymaker Joachim Nagel said on German radio on Sunday.
The ECB cut interest rates on Thursday for the eighth time in a year but signalled at least a policy pause next month after inflation returned to its 2% target.
Nagel, who is also the president of Germany's central bank, said rates are now at a neutral level - central-banker language to describe policy that neither expands nor brakes the economy.
"We are no longer restrictive. I believe that we can now take the time to look at the situation first. We now have maximum flexibility at this interest rate level," Nagel said in a live interview on Deutschlandfunk radio.
The ECB has lowered borrowing costs eight times, or by 2 percentage points since last June, seeking to prop up a euro zone economy that was struggling even before erratic U.S. economic and trade policies dealt it further blows.
(Reporting by Tom Sims; Editing by Bernadette Baum)
Nagel stated that the European Central Bank can take its time on interest rates as they are now at a neutral level that is no longer restrictive.
The ECB has cut interest rates eight times in the past year, lowering borrowing costs by 2 percentage points since last June.
A neutral interest rate level indicates a monetary policy that neither expands nor contracts the economy, providing maximum flexibility.
The ECB has signaled a return to its inflation target of 2%, which has influenced its decision to pause rate cuts.
Nagel emphasized that the ECB is no longer in a restrictive position and can now assess the economic situation with greater flexibility.
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