Eurozone inflation remains a concern, and a rate cut by the European Central Bank (ECB) in June may not necessarily lead to further policy easing, according to Bundesbank President Joachim Nagel, as reported by Reuters.
Nagel made these remarks on Wednesday, amidst ongoing debates among policymakers about the future rate path.
The ECB has essentially committed to a rate cut at its next policy meeting on June 6; however, Nagel expressed concerns about price growth and suggested that this step might not be followed by a series of rate cuts. “Given the current uncertainty, we cannot pre-commit to a particular rate path,” he said during a speech in Berlin.
Nagel’s comments are the most cautious among policymakers, many of whom believe that further policy easing is still more likely, even if they are not ready to commit to a specific schedule.
Nagel expressed particular concern about service inflation, which is still driven by continued strong wage growth and has proven more persistent than goods inflation.
“I am not fully convinced yet that inflation will actually return to target in a timely and sustained manner,” he added.
