ECB Rate Hikes Depend on Energy Price Volatility, Says Bundesbank Chief

Bundesbank President Joachim Nagel indicated that further interest rate hikes by the European Central Bank (ECB) will be largely dependent on energy prices. Speaking after the ECB's decision to raise its key rate by 25 basis points to 2.5%, Nagel stated that the regulator would assess how energy prices and the overall price situation change over the next month.

Nagel noted that it is currently too early to consider whether one or two further rate hikes may be possible within the current cycle, citing the volatility of the energy market over the past month. Energy prices rose last week, with oil approaching $110 per barrel.

According to Nagel, current rates are at the upper end of the neutral range, meaning that monetary policy neither stimulates nor restrains economic growth. However, he did not rule out the possibility of moving to moderately restrictive monetary policy in response to changing circumstances.