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ECB: Nagel "Convinced" Reaching 2% Target Sustainably But Mentions Risks

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ECB's Nagel sees the ECB "convinced" inflation will remove back to target sustainably but continues to highlight some risks to that view. Additionally, he sees a stagnation for the German economy in Q4, and slightly negative growth in DE for 2024 overall in his speech today in Dortmund:

  • "We are convinced that we will achieve our inflation target of 2 per cent soon and permanently, even with lower interest rates." He mentioned some upside risks though, with wage growth potentially declining slower than expected, tariffs, and services inflation.
  • "Although there is still price pressure from wages, the inflation rate in Germany should gradually fall again over the course of 2025. This also applies to price trends in the eurozone"
  • "The fact that wages are well advanced in compensating for the loss of purchasing power due to the surge in inflation is having a positive impact."
  • Mentions meeting-by-meeting approach, deciding in December if a "further interest rate move will follow" - he didn't comment on the possibility of an accelerated cut in December.
  • Reverting to the broader topic of his speech, he specifically highlights four structural problems facing the German economy: energy prices, CO2 transition incurring additional costs, demographic shifts, and protectionism / fragmentation.
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ECB's Nagel sees the ECB "convinced" inflation will remove back to target sustainably but continues to highlight some risks to that view. Additionally, he sees a stagnation for the German economy in Q4, and slightly negative growth in DE for 2024 overall in his speech today in Dortmund:

  • "We are convinced that we will achieve our inflation target of 2 per cent soon and permanently, even with lower interest rates." He mentioned some upside risks though, with wage growth potentially declining slower than expected, tariffs, and services inflation.
  • "Although there is still price pressure from wages, the inflation rate in Germany should gradually fall again over the course of 2025. This also applies to price trends in the eurozone"
  • "The fact that wages are well advanced in compensating for the loss of purchasing power due to the surge in inflation is having a positive impact."
  • Mentions meeting-by-meeting approach, deciding in December if a "further interest rate move will follow" - he didn't comment on the possibility of an accelerated cut in December.
  • Reverting to the broader topic of his speech, he specifically highlights four structural problems facing the German economy: energy prices, CO2 transition incurring additional costs, demographic shifts, and protectionism / fragmentation.