(Bloomberg) -- The European Central Bank is prepared to raise interest rates further if inflation proves more stubborn than thought, Governing Council member Joachim Nagel told Central Banking in an interview.
“We have done a lot by implementing 10 hikes so far,” he was quoted as saying. “Maybe more will be on the way if the data indicate that further action is warranted.”
Inflation is slowing in most parts of the 20-nation euro zone but is only seen returning to the ECB’s 2% target in the second half of 2025. Any delay to that scenario will likely embolden policy hawks such as Nagel to push for additional rate increases.
A softening economy will likely help cool price pressures. Manufacturing has been mired in a slump for more than a year and services are now showing signs of weakness too.
Still, Nagel expressed confidence that a major economic meltdown can be avoided.
“My baseline scenario is that we could end this cycle of rate hikes with a soft landing,” he said in the interview, which was conducted Sept. 18.
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