Nagel Signals Rate Hike Next Week, Cautious on Future Moves

European Central Bank (ECB) Governing Council member Joachim Nagel hinted that interest rates will be raised next week, but expressed caution about future moves. The Bundesbank president acknowledged market expectations of a rate hike, stating that the markets have 'a rather good understanding' of the ECB's likely response.

Nagel cited inflation as a concern, noting that it stands at 3.3% in August and is not close to the ECB's medium-term target of 2%. He also warned about the risk of second-round effects on wages if price gains remain elevated for an extended period.

The Bundesbank president highlighted the uncertainty surrounding oil and gas prices, as well as financial market volatility. Nagel emphasized that the ECB will focus on its mission to ensure price stability in the euro area, despite global bond yields increasing and complicating the situation.