Nagel: ECB approaching interest rates peak

Interest rates in the Eurozone are close to their peak according to Wednesday’s statements by Bundesbank President Joachim Nagel who also explained that economic data will determine whether more tightening is needed. As for inflation, Nigel mentioned it is on track to move towards the ECB target while speaking at an even in Milan.

The EUR/USD is falling on Wednesday; it trimmed losses during the last two hours, rising from near 1.0850 to 1.0880.

Nagel believes the ECB is close to a level considered as the terminal rate. He noted that he is uncertain if the ECB will implement further rate increases.

He anticipates that the ECB rates will remain stable for some time. There is no concern that the ECB is moving toward a hard landing. Commenting on Inflation, Nagel has described inflation as a “greedy beast.” He acknowledges the existence of some risk factors that could potentially trigger inflation.

Only one day earlier, ECB President Christine Lagarde warned against premature inflation celebrations in a speech to the European Parliament’s Committee on Economic and Monetary Affairs. She emphasized that the ECB has time to assess inflation after a record string of rate hikes, but short-term data flow bets are premature. The drop in inflation has fueled expectations of a rate cut by the ECB, despite policymakers’ guidance suggesting a more detailed timeline.