MNI BRIEF: Cuts Should Be Timely But Cautious - Buba's Nagel

MNI (LONDON) - The ECB’s Governing Council is increasingly confident inflation will reach the 2% target sustainably “soon and permanently,” and should not wait until the target has been reached before easing interest rates further, Bundesbank President Joachim Nagel said in a speech on Monday.

But it is important to remain cautious and loosen monetary policy “only gradually and not too quickly,” he added, with risks including a slower-than-expected decline in wage growth, U.S. trade tariffs, persistently high core inflation, volatile energy and food prices, and continued sharp rises in services prices. (See MNI INTERVIEW: ECB Looks At "Restrictive" Language - Holzmann)

“The time is approaching when we can expect a sustained return to the 2% mark,” Nagel said, noting that monetary policy is still restrictive and helping to lower inflation, with new ECB forecasts due in December.  “It is important to note that the ECB Governing Council is not committed to a specific interest rate path. We decide from meeting to meeting how to proceed."