ECB needs evidence that inflation is heading to target, Nagel says

The European Central Bank must be convinced that inflation is heading back to its 2% target before cutting interest rates, Bundesbank President Joachim Nagel said on Tuesday.

The bank has essentially pre-announced a rate cut for June but policymakers are expressing a wide range of views on where policy should go thereafter.

“Before cutting interest rates, we must be convinced based on data that inflation will actually reach our target in a timely and sustained manner,” Nagel, an influential conservative on the rate-setting Governing Council, said in a speech.

“If the favourable inflation outlook from March is confirmed in the June projections and incoming data supports this outlook, we can consider a rate cut,” he added.
Source: Reuters (Reporting by Balazs Koranyi; Editing by Kirsten Donovan)