The European Central Bank will be able to reduce borrowing costs if economic data do not bring any negative surprises, Bundesbank President Joachim Nagel said.
“If the numbers remain the same over the next 12 months, there is a possibility that we will cut interest rates further at some meeting,” the German central banker told reporters in Rio de Janeiro on Thursday.
Speaking on the sidelines of the Finance Ministers’ meeting of the G20Nagel said the ECB was not on “autopilot” in terms of interest rate cuts and stressed that “it is enough to be patient and, above all, to keep monetary policy in a restrictive territory until inflation reaches a stable level of 2%”.
Nagel stuck to the ECB’s line that policy will be decided on a meeting-by-meeting basis and warned against “compromising” on what might happen in September.
Echoing earlier comments, he stressed that wage developments in the euro area were still “very strong” and said a return to 2% inflation would be “abnormal”.
However, he acknowledged that the “greedy beast of inflation” no longer exists.