Joachim Nagel states that European Central Bank interest rate hikes will depend on energy price trends.
Joachim Nagel, the head of the German central bank, stated that future interest rate hikes by the European Central Bank will depend on how energy prices evolve over the coming months. This follows a recent quarter percentage point hike to 2.5%.
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Nagel noted that oil prices remain elevated, with both Brent crude and U.S. WTI trading above $100 a barrel. European gas prices are also under pressure as Dutch TTF futures reached their highest levels since 2022. Nagel indicated that current rates are at the upper end of neutral territory, but he did not rule out the possibility of entering mild restrictive territory. He noted that energy prices experienced significant volatility over the last month. While Nagel expressed that it is too early to speculate on the number of remaining hikes in the current cycle, he stated that the next assessment will be made based on the energy price development over the next several weeks and months. Nagel also noted that he is not concerned about low European gas storage levels heading into winter, as the situation is not comparable to the previous energy crisis due to more options for purchasing LNG.