(Bloomberg) -- Euro-area inflation may slow to the European Central Bank’s inflation target earlier than anticipated, according to Bundesbank President Joachim Nagel.
“We assume that we can possibly reach our target rate of 2% earlier than we thought we would in 2025,” the German central banker told reporters in Washington, where he’s attending annual meetings of the International Monetary Fund.
The ECB’s most recent forecast — from September — predicted 2% would only be reached in the final quarter of next year, though officials familiar with the Governing Council’s thinking told Bloomberg last week that officials now expect that to happen in the first or second quarter.
The central bank has reduced borrowing costs three times since June, with markets and economists predicting more such moves ahead. Nagel warned against speculation on what’s next, saying “we shouldn’t be too hasty in thinking about the further course of interest-rate cuts.”
“We are now certainly heading into a few weeks that won’t only be shaped by the US elections, we will also get more inflation figures,” he said, adding that base effects may cause an uptick in consumer-price growth and also pointing to new economic forecasts due for the Dec. 12 decision.
“We have done very well by deciding meeting by meeting,” he said. “That way of responsible monetary policy has certainly worked well over the past two and a half years.”
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