OR European Central Bank must maintain full optional interest rates because the uncertainty about growth and prospects and inflation It remains increased, according to Board member Joachim Nugel.
“Since critical factors can change quickly in today’s environment, it is advisable to remain flexible,” the Bundesbank president said today (16.6.2025). “This means that the predecessor of the future – not a further reduction in interest rates or a cessation of monetary policy – makes sense.” Speaking to Frankfurt’s Euro Finance Summit, Mr Nagel said the recent data and forecasts of the ECB marked “a mission” on inflation. Even so, there is no reason for complacency, he added.
“It is important to have our eyes and ears open to dangers that threaten price stability,” Nagel said. “This is also true of today’s developments in the Middle East,” he added, referring to the ongoing hostilities between Israel and Iran.
After relaxing 200 base points within one year, officials are weighing whether the borrowing costs have already reached the final destination of the cycle or if it should be further reduced. The key deposit rate is currently at 2%, a level that is generally considered neutral for economic activity.
President Christine Lagarde said the reductions are coming to an end, as the ECB is now “in a good position” to cope with prevailing uncertainties. Some policymakers have recently suggested that it may need a “fine arrangement”.
Eurozone inflation has fallen just below its 2% target in May and is expected to slow down by 2026 before returning to the target in 2027.