ECB nears end of rate hike – Nagel

The European Central Bank (ECB) may be approaching the end of its cycle of interest-rate increases, according to Governing Council member Joachim Nagel. Nagel said that he is very satisfied with the ECB’s monetary policy but that interest-rate hikes are not yet over, and core inflation still needs to be tamed. Nagel added that they are approaching the end in the sense that they are reaching the area in monetary policy that is considered restrictive. He added that he is confident that monetary policy is showing its effect.

Most economists agree with Nagel’s view, and they predict that the ECB will raise its deposit rate twice more, in June and July, leaving it at a peak of 3.75%. The US Federal Reserve has already opened the door to a pause in its cycle, though it began tightening before officials in Frankfurt.

Greek Central Bank Chief Yannis Stournaras has said that ECB rate increases will end in 2023. Meanwhile, Latvia’s Martins Kazaks has warned that hikes may persist beyond July.

Nagel described last week’s decision to slow the pace of tightening while announcing a halt in reinvestments under the Asset Purchase Program as the right move. However, he underlined that the job is not complete, adding that there is still work to be done, and they need to stay stubborn.