Finance
ECB's Nagel says rates are right despite inflation dip
Published by Global Banking & Finance Review®
Posted on February 9, 2026
2 min readLast updated: February 9, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on February 9, 2026
2 min readLast updated: February 9, 2026
ECB's Joachim Nagel supports the current interest rate amid a short-term inflation dip, expecting it to meet the 2% target.
FRANKFURT, Feb 9 (Reuters) - The European Central Bank's policy rate is at the right level as inflation is likely to settle at its 2% goal after a short-lived dip, ECB policymaker Joachim Nagel said on Monday.
The ECB unanimously kept its main interest rate unchanged at 2% last week, but some policymakers remain concerned that price growth, which eased to 1.7% last month, might weaken too much, forcing the euro zone's central bank to react.
Bundesbank President Nagel said the ECB would only act if its medium-term inflation expectations deviated "sustainably and noticeably" from target, but this did not appear to be the case.
"Many factors suggest that the current interest rate level is appropriate," he said. "First, the (inflation) shortfall is short-term and small and, in the medium term, inflation is at our target."
He added that long-term inflation expectations were "firmly anchored", and measures of core prices, which strip out volatile items such as energy and food, also supported this view, as did an update of the ECB's December projections.
Data published last week showed much of January's drop in inflation was due to lower energy costs although services also saw a moderation in price increases.
"Small, temporary deviations – especially in volatile components such as energy prices – do not ... require a change of course if inflation expectations are firmly established," Nagel said.
He said this applied both when "the inflation target might be undershot" and when inflation risked running too high.
(Reporting by Francesco Canepa. Editing by Mark Potter)
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to achieve macroeconomic goals such as controlling inflation, consumption, growth, and liquidity.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount. They are influenced by central bank policies and market conditions.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
The European Central Bank (ECB) is the central bank for the eurozone, responsible for monetary policy within the Euro area, aiming to maintain price stability and oversee the banking system.
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives, facilitating capital flow and investment.
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