Inflation: Bundesbank President Nagel calls for a key interest rate cut in June

Inflation: Bundesbank President Nagel calls for a key interest rate cut in June

Bundesbank President Joachim Nagel emphasized that the return of inflation to the target value is not an automatic development. In this context, he expressed his positive opinion about a possible cut in key interest rates in June if price developments follow expectations. The European Central Bank (ECB) left key interest rates unchanged at its last meeting, but signaled the possibility of a rate cut in the near future.

Christine Lagarde, the President of the ECB, made it clear that some members of the Governing Council of the ECB are already in favor of cutting interest rates. Nagel himself sees a key interest rate cut in June as likely, especially in view of medium-term price developments. However, he pointed to certain uncertainties, including current tensions in the Middle East, which could affect oil prices.

Nagel emphasized that the development of energy prices and wages are crucial for the future inflation rate. Wage developments in the euro area in particular are being closely monitored as this has a direct impact on price pressure. Despite a current weakening of the inflation rate in March to 2.4 percent, uncertainty remains as to whether inflation will reach the target value of two percent in the long term and remain stable there. Nagel underlined the Governing Council's responsibility for price developments and emphasized the importance of an appropriate monetary policy response.