Nagel Keeps Rate Hike Option Open Amid Eurozone Growth Concerns

The president of the Bundesbank, Joachim Nagel, has opened the door to another interest rate hike by the European Central Bank (ECB), even if it means slowing down economic growth in the eurozone.

Nagel stated that with the recent 25 basis point rate increase, they are likely at the upper limit of neutral territory. He also mentioned that he does not rule out entering a slightly restrictive phase for the economy, but emphasized that this would depend on the behavior of inflation and energy prices over the next month.

The current deposit rate (DFR) is 2.5%, which is considered the upper extreme of the neutral interest rate for the economy. The ECB's president, Christine Lagarde, also mentioned during a press conference that the neutral rate is a theoretical notion and does not solely determine their decisions.