European Central Bank Governing Council member Nagel: Interest rates are at a "very good level," and the central bank can act flexibly
European Central Bank Governing Council member Nagel stated that the current borrowing costs in the Eurozone are sufficient to cope with trade resistance, and the central bank can respond flexibly to economic changes. He pointed out that key interest rates are at an ideal level, and inflation is no longer a significant challenge. The market expects that the European Central Bank may not lower interest rates again in the short term, although some central bank governors are cautious about future interest rate decisions. Nagel also warned that the increase in U.S. tariffs could bring harm
According to the Zhitong Finance APP, Joachim Nagel, President of the German Central Bank and member of the European Central Bank's Governing Council, stated that the current borrowing cost level in the Eurozone is sufficient to cope with ongoing trade resistance, allowing the European Central Bank to respond flexibly to further shocks if necessary.
Nagel said, "The key interest rates are currently at a very ideal level," and "We can observe the economic development from here. If needed, we can respond flexibly."
Nagel pointed out that due to the stability of the year-on-year increase in the consumer price index at 2% over the past two months, "we can now remove inflation from the major challenges list."
These remarks reinforced market expectations: after eight consecutive rate cuts of 25 basis points within a year and maintaining the interest rate at 2% in July, the European Central Bank's willingness to cut rates again next month may be limited.
Christodoulos Pashalidis, Governor of the Central Bank of Cyprus, believes that interpreting last month's rate decision as a pause before subsequent actions is "premature."
Peter Kazimir, Governor of the Slovak Central Bank, argued that the European Central Bank should not cut rates again unless there is evidence of severe economic deterioration. Meanwhile, Martins Kazaks from Latvia stated that "maintaining the current interest rate level is valuable."
Staying put gives the European Central Bank time to assess the impact of recent EU-US trade agreements—under which the EU accepted a 15% tariff on nearly all of its exports to the United States.
Nagel warned that these tariffs would cause damage, and some issues remain unresolved.
"The level of US tariffs has significantly increased compared to before," he said, "Many details still need to be clarified. It is important that there is no room for interpretation in the end. We see from the US government: today's rules may change tomorrow."
