ECB Governing Council member Nagel stated that there are sufficient reasons to raise interest rates next month and begin tightening the economy to curb inflation.
The Bundesbank President said in an interview on Tuesday that consumer price increases are "too high." "It is obvious that we must take further action on top of the work already done," Nagel said in Riga. "With this new data, we will have a clearer picture."
Policymakers considering the next rate move are currently assessing the impact of the sharp drop in oil prices following the U.S. midterm elections. However, the prospect of the Iran war ending remains uncertain, and investors continue to bet on at least two more rate hikes in the coming months to curb inflation that is currently running at twice the 2% target.
The ECB is expected to raise the deposit rate by 25 basis points to 2.75% at its final monetary policy meeting of 2026. This would be the third rate hike since the outbreak of the Middle East conflict.
Nagel described the central bank's current policy setting as "at the upper limit of the neutral range." "If the data shows that inflation will be far above our 2% target, then we must move into restrictive territory," Nagel said.
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