MNI BRIEF: High Uncertainty Leaves No Room For Easing - Nagel

There is currently no for the European Central Bank to further relax its monetary policy stance, Bundesbank president Joachim Nagel said in a speech on Monday. But policymakers must remain alert, despite having accompanied their mission of getting inflation back to 2%.

“Even though inflation in the eurozone is back at around 2% and is likely to remain there in the medium term after a dip, there is no reason for monetary policy to ease,” Nagel said. (See MNI SOURCES: ECB Eyes July Pause, Tariffs Key To Cut Timing)

The ECB should maintain a cautious meeting-by-meeting approach to monetary policy, Nagel said, and the Governing Council itself should avoid contributing to the already great amount of uncertainty with its own communications. 

“We must keep our eyes and ears open for risks to price stability. This also applies in view of the current developments in the Middle East," he said.

“As crucial factors can change rapidly in the current environment, we would be well advised to remain flexible. This means that it does not make sense to make any predetermined decisions – neither on a further interest rate cut nor on maintaining the status quo in monetary policy."