Not all follow ECB rate cut, According to Nagel By Reuters
According to Bundesbank President Joachim Nagel on Wednesday, further policy easing would not always follow a rate cut by the European Central Bank in June due to the possibility that inflation in the euro zone will continue to prove tenacious.
The European Central Bank (ECB) has signaled that it may postpone its rate-cutting efforts, and this has clouded the outlook further. Policymakers are currently discussing the course of interest rates beyond the June 6th meeting.
Although no policymaker has contested the rate drop in June, which some have referred to as a "fait accompli," Nagel acknowledged that he was still concerned about price increases.
"A sequence of rate cuts would not necessarily follow such a step," Nagel stated during a lecture in Berlin. "Given the current uncertainty, we cannot pre-commit to a particular rate path."
Though they were not prepared to commit to a specific schedule, many officials cite the cautious statements as evidence that more policy easing was still inevitable.
Nagel expressed particular concern about services inflation, which has shown to be more enduring than goods inflation and is still fueled by robust pay rise.
"I am not fully convinced yet that inflation will actually return to target in a timely and sustained manner," Nagel stated.
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