Joachim Nagel, a member of the European Central Bank's (ECB) Governing Council and President of the Deutsche Bundesbank, stated that the future of interest rate cuts remains uncertain. He emphasized that the ECB's monetary policy has now reached a neutral stance, allowing for greater flexibility in decision-making. Nagel was unable to confirm if the recent 25 basis point rate cut would be the last for 2025, highlighting that future actions remain "completely open."
Previously, ECB President Christine Lagarde suggested that the cycle of rate cuts might be nearing its end after the eighth reduction this year. Some officials believe the current cycle has concluded. The ECB's latest forecasts indicate that the inflation rate in the Eurozone fell to 1.9% in May, with expectations of an average inflation rate of 1.6% in 2026, rising to 2% in 2027, aligning with the ECB's target.
Nagel noted that inflation is now close to the ECB's goal, marking a positive development. However, the full impact of U.S. trade policies on the European economy is yet to be felt, despite its current resilience.
