MNI BRIEF: EZ Fiscal Policy Neutral For ECB  MonPol - Nagel

The Eurozone fiscal policy for 2024 will not create “too many problems” for the European Central Bank monetary policy stance, but it should be clearer that countries must be more cautious now that “extraordinary times are over”, reverting to a “more sound fiscal policy”, Bundesbank Governor Joachim Nagel told an MNI Webcast on Friday.

Nagel noted that he is not “too enthusiastic” on how Europe’s fiscal rules have changed as he sees a “lack of transparency” and excess of discretionary room for negotiating adjustments.

“Debt to GDP ratios need to go down”, he said, adding that he would be satisfied if the new rules allow it. Nagel did not see any connection between the new rules and the Transmission Protection Instrument as he saw the latter as purely a monetary policy tool.