Nagel: Headline inflation has fallen significantly in recent months

ECB Governing Council member Nagel said that if the inflation outlook worsens, further interest rate hikes might be necessary. Nagel stated that it is too early to discuss interest rate cuts.

The ECB ended the interest rate hike cycle it began due to high inflation in October. The bank is also not expected to raise interest rates at its December meeting. In the markets, the first interest rate cut is being priced in for April.

Regional inflation fell to 2.9 percent in October after peaking at 10.6 percent last year.

Nagel stated that headline inflation has fallen significantly in recent months, saying, "The disinflationary effects of falling energy prices have diminished, and we are still far from our inflation target. A bumpy road for inflation is expected in the near future." Nagel expressed that a new interest rate hike could occur if the inflation outlook worsens.

Stating that there might not be a hard landing in the economy, Nagel said, "A tight labor market, low debt levels of companies and households, and a revival in investment activity indicate that the conditions for a 'soft landing' are in place."

News Source: 12punto