Bundesbank President Nagel links further ECB rate hikes to energy prices
In Germany, Bundesbank President Joachim Nagel said that further interest rate hikes by the European Central Bank will largely depend on the dynamics of energy prices. He said this in an interview with CNBC after the ECB raised its key rate by 25 basis points to 2.5%.
The decision will depend on prices
According to Nagel, the regulator will assess how energy prices and the overall price situation change over the next month. He noted that it is currently too early to consider whether one or two further rate hikes may be possible within the current cycle.
Nagel drew attention to the volatility of the energy market over the past month. He said that energy prices rose last week, while the price of oil approached $110 per barrel.
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Possible restrictive policy
The Bundesbank chief believes that current rates are at the upper end of the neutral range. At this level, monetary policy neither stimulates nor restrains economic growth. At the same time, Nagel did not rule out that there may be a need to move to moderately restrictive monetary policy.
Against the backdrop of these statements, Brent and WTI oil prices exceeded $100 per barrel. European gas prices were also under pressure: futures at the Dutch TTF hub reached their highest level since 2022.
Gas reserves ahead of winter
Nagel also said that he is not concerned about Europe’s relatively low gas storage levels ahead of winter. In his view, the current situation is not comparable to the energy crisis of 2022–2023, as countries have more opportunities to purchase liquefied natural gas.
