MNI BRIEF: Cautious, Measured Easing Warranted - Buba's Nagel

MNI (LONDON) - The ECB should adopt a cautious approach to monetary easing, Bundesbank president Joachim Nagel said in a speech Wednesday, with interest rates converging “slowly and at a measured pace towards neutral territory.”  (See MNI BRIEF: ECB Should Cut, Remain Gradual, Data Focused-Kazaks)

"At the beginning of this week, markets had priced in an interest rate reduction of approximately 32 basis points. Given that the disinflation process is proceeding largely as currently projected, at this stage I would have no objections if we were to continue to reduce our policy rates," he said

However, he did leave the door I reserve my final judgement until I have reviewed the new macroeconomic projections for December and made up my mind concerning the risks surrounding the baseline."

The exact location of neutral territory is difficult to pin down, Nagel said, however he did not see a "significant risk of inflation undershooting that would warrant the Eurosystem becoming expansionary in the near future."