ECB Hike Likely in September, Says Nagel, but Forward Guidance Remains Elusive

ECB Governing Council member Joachim Nagel has signaled that the European Central Bank (ECB) is likely to raise interest rates next week, with markets pricing in a greater than 95% probability of a September hike.

Nagel, who is Bundesbank President and considered a hawk, emphasized the ECB's 'meeting-by-meeting' approach beyond September due to volatile energy prices, financial market instability, and broader uncertainty.

He noted that Eurozone natural gas prices are at a three-year high, posing renewed inflation risks and complicating policy. This situation may lead to another difficult winter and increased pressure on inflation expectations.