Nagel Opens Door to Another Rate Hike Amid Inflation Concerns

Joachim Nagel, President of the Bundesbank, has hinted that another interest rate hike by the European Central Bank (ECB) may be necessary to combat inflation, even if it weighs on economic growth.

Nagel stated that he does not rule out entering 'slightly restrictive territory' for monetary policy in the eurozone, citing the potential impact of energy prices on inflation.

He emphasized that Europe must closely monitor gas costs as winter approaches, despite having LNG terminals. Nagel also noted that the current situation is not comparable to last year's crisis triggered by Russia's war against Ukraine.

The Bundesbank president's comments follow the ECB's decision to raise interest rates by 25 basis points on Thursday, setting the deposit rate at 2.5%. This rate is considered the upper extreme of neutral territory and may begin to weigh on growth if consistently exceeded.