ECB’s Nagel: Eurozone price pressures could continue for some time

In an interview on Wednesday, European Central Bank policymaker and Bundesbank Chief Joachim Nagel said that price pressures in the Eurozone could continue for some time, per Reuters.

“It’s not completely clear if the inflation rate will reach 2% target next year and stay at this level,” Nagel added and noted that he expects a “slight growth” in German economy in 2024.

These comments don’t seem to be impacting the Euro’s valuation in a noticeable way. At the time of press, EUR/USD was up 0.15% on the day at 1.0635.

“We are observing a disinflationary process that is moving according to our expectations,” Christine Lagarde told CNBC’s Sara Eisen on the sidelines of the IMF Spring Meetings. “We just need to build a bit more confidence in this disinflationary process but if it moves according to our expectations, if we don’t have a major shock in development, we are heading towards a moment where we have to moderate the restrictive monetary policy,” Lagarde said.

Lagarde’s comments come shortly after the European Central Bank gave its clearest indication to date that it could start cutting interest rates during its June meeting. According to Lagarde, European Central Bank President Christine remains on course to cut interest rates in the near term, subject to any major shocks.

Lagarde said the ECB would monitor oil prices “very closely” amid elevated fears of a spillover conflict in the Middle East. However, since Iran’s unprecedented air attack on Israel over the weekend, she said the oil price reaction had been “relatively moderate.”

Her comments come shortly after the central bank gave its clearest indication to date that it could start cutting interest rates during its June meeting.

In a shift from previous language, the ECB said “it would be appropriate” to lower its 4% deposit rate if underlying price pressures and the impact of previous rate hikes were to boost confidence that inflation is falling back toward its 2% target “in a sustained manner.”