ECB governing council member Joachim Nagel says the eurozone shows no sign yet of an inflation spiral, giving the central bank room to skip a rate hike this month. He kept December in play, with markets still pricing a strong chance of a move by then.
Joachim Nagel is not sounding like a policymaker in a rush. The ECB governing council member's latest comments point to an October pause, but he left a December rate hike firmly on the table.
Nagel sees no inflation spiral yet
Nagel said he sees no sign of "inflation feeding through to price and wage setting" yet. That eases concern about second-round effects and is a hint the ECB has more room to wait in October.
Still, he flagged that inflation risks remain tilted to the upside, and said higher energy prices could keep price growth elevated for longer. Longer-term inflation expectations, he added, remain broadly anchored around the ECB's 2% target. Nagel said the central bank should stay flexible and respond to incoming data.
Euro area inflation at 3.8% keeps the ECB watchful
The caution comes as euro area inflation hit 3.8% in September. The ECB wants to stop a temporary energy shock from turning into something more persistent, and that risk grows if companies pass costs through faster and workers push back with wage demands. For now, Nagel maintains that point has not been reached.
Markets split on timing
Traders are not betting on an October move. Markets are pricing roughly a 79% chance of no rate hike this month, but December looks different. Markets are pricing around a 66% chance of a rate hike by then, and Nagel's comments can be read as supporting that view. His repeated point that inflation risks still lean higher reads as an argument for patience now, not for ruling out action later.
Source: Investinglive RSS Breaking News Feed
Trading involves risk.
Risk Disclaimer
