ECB’s Nagel says restrictive policy cannot be ruled out

The Bundesbank President and European Central Bank (ECB) member Joachim Nagel crossed the wires at a financial event in London, where he acknowledged that high energy prices had driven inflation off its 2026 target.

Nagel added that he is not concerned about the labour market and added that “rates are still in neutral territory,” and recognized that he can’t exclude the possibility that the EC needs to turn mildly restrictive.

Key highlights:

I am not so concerned about labour market developments

We are conducting monetary policy in between constructive ambiguity and forward guidance

I do not see too much uncertainty in markets about what drives our decision making

ECB rates are still in neutral territory, cannot exclude that we will need to go into mild restrictive territory