In a webcast today, ECB Governing Council member Joachim Nagel indicated that the chance is increasing for a first rate cut “before the summer break” in August. However, he cautioned that afterwards, ECB will maintain a data-dependent approach and policy loosening wouldn’t be on autopilot.
“I do not see that there is a kind of automatism,” he remarked. “It is data dependent and it is not a done deal that everything is going smoothly for the rest of the year or maybe for next year. So we have to be vigilant, we have to be cautious.”
The ECB official flagged several “open issues” that warrant cautions, including the volatility in energy prices and the ongoing uncertainties surrounding wage growth and profit margins. “This meeting-to-meeting approach is the best way to address the current situation,” he added.
