(Bloomberg) -- The European Central Bank mustn’t declare victory over inflation too soon — even if the retreat in consumer-price growth may allow another interest-rate cut next week, according to Governing Council member Joachim Nagel.
Although inflation is heading to the 2% target, “we shouldn’t prematurely burst into cheers and pat ourselves on the back,” the Bundesbank president told FAZ in an interview published Tuesday. “We haven’t reached our goal yet.”
“I really won’t make a decision until the ECB Governing Council meeting next week, when I will have a complete overview of all the data,” he said about a possible second rate reduction. “But I will say this: I see inflation on the right track.”
His comments come as more and more policymakers endorse market expectations for another cut in borrowing costs on Sept. 12. The ECB started lowering rates in June, citing increased confidence that inflation would fall back to target in the second half of 2025.
Bolstering the case for a move next week have been figures showing a plunge in inflation to 2.2% in August and a moderation in euro-zone wage increases in the second quarter.
Nagel sees the recent data as in line with the ECB’s outlook, but again urged caution.
“We must remain vigilant and keep an eye on the risks on the way back to stable prices,” he said, referring to still strong wage growth and sticky services inflation.
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