European Central Bank Committee: Core inflation in the euro zone is still very challenging.

Zhitong Finance ·  Jun 13 08:30

ECB Governing Council member Nagel said that the Eurozone's potential consumer price index growth is proving to be stubborn.

Bundesbank President Joachim Nagel (Joachim Nagel) said that Eurozone potential consumer price index (CPI) growth is proving to be stubborn.

Nagle reiterated at the American International Economic Forum that he and his colleagues will not simply automatically reduce borrowing costs, but will judge the situation at the time of each meeting.

“Core inflation is indeed still very difficult,” Nagle said in Montreal, Canada on Wednesday. At the same time, he acknowledged that it was right to relax the policy last week. “We're on a bumpy road, but we all know that the last mile is the most complicated.”

On Thursday, the ECB cut deposit interest rates by 25 basis points after maintaining a record 4% interest rate for 9 consecutive months. However, when inflation expectations for 2024 and 2025 were raised at the same time, it sparked a debate about whether the reduction was reasonable and made investors question the next step in monetary policy.

“We shouldn't be too confident or too optimistic,” Nagle said. “We're not on autonomous driving,” and “the best way to deal with this is a one-on-one approach,” he added.

Earlier on Wednesday, ECB Vice President Luis de Guindos (Luis de Guindos) said that the ECB cannot make any decisions in advance this year because it faces unstable inflation and an unpredictable economic outlook. Latvian central bank governor Martins Kazaks (Martins Kazaks) said interest rates may be cut further this year, but he urged caution as inflation “sometimes makes a comeback.”

Nagle said, “In this very uncertain world, we must be very careful and not show any complacency in the task of fighting inflation.” “The work is not done yet.”

Not long ago, the Federal Reserve kept interest rates unchanged. It is expected to cut interest rates only once this year, and is expected to cut interest rates further in 2025 — strengthening the call of policymakers to keep borrowing costs high for a longer period of time.

When asked about the impact of US policy on Eurozone policy, Nagle insisted that the ECB did “formulate monetary policy for the Eurosystem,” but did acknowledge spillover effects and indirect “feedback loops.”

“Central banks on both sides of the Atlantic must be more stubborn than inflation,” he said. “This is the similarity I saw.”

The translation is provided by third-party software.

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