MNI BRIEF: Bundesbank's Nagel Says Needs More Clarity On Core

The European Central Bank needs more clarity “especially for core inflation” before it can confidently start cutting interest rates, Bundesbank Governor Joachim Nagel told an MNI Webcast on Friday.

“We shouldn’t declare victory on inflation too early,” he said, adding that the last mile in reducing inflation is always the most complicated in each interest rate cycle. While he sees a growing probability of an interest rate cut before the summer it is too soon to establish that this will be in June, he said. (MNI BRIEF: Chances Of ECB Cut Before Summer Break Rising-Nagel)

Nagel said he favoured “constructive ambiguity” and avoiding precommitting too clearly to cuts, and that easing too early could have negative consequences for inflation and be costlier in the longer term.

“I know my hurdle, but I will not tell it, this is constructive ambiguity,” he said, when asked what data would prompt him to oppose a cut.