MNI BRIEF: ECB Policy Not Set Solely On R* Estimates - Nagel
MNI (LONDON) - It would be risky to base monetary policy decisions on estimates of the neutral rate of interest alone, with additional data needed to assess the current monetary policy stance and the optimal policy path for the near future, Bundesbank President Joachim Nagel saidon Wednesday.
The Eurosystem uses financial, real economic and other indicators along the monetary policy transmission mechanism to set policy, with estimates of neutral is just one part of the equation, Nagel said. (See MNI SOURCES: ECB Likely To Tweak Language, Keep "Restrictive" )
Speaking at an OMFIF event in London, Nagel said the closer policy gets to the perceived neutral rate, the more appropriate it becomes to take a gradual approach.
"Proceeding in a data-driven and gradual manner has served the ECB Governing Council well. There is no reason to act hastily in the present uncertain environment and the data will tell us where we need to go,” he said.