The head of the Bundesbank and member of the Governing Council of the European Central Bank (ECB), Joachim Nagel, has signaled that the regulator is ready to raise interest rates at the upcoming meeting in September. In an interview with the French newspaper Le Monde he noted that financial markets are correctly assessing the regulator's current stance.
"Markets assess the probability of a rate hike at the September meeting at more than 95 percent, and I would say they have a fairly good understanding of how we are likely to react at this stage," Nagel said.
At the same time, the Bundesbank president refrained from any forecasts regarding monetary policy beyond the September decision. He stressed that the ECB prefers to make decisions "meeting by meeting," and this approach is fully justified under the current macroeconomic conditions.
"Beyond the September meeting, I am cautious about giving any specific guidance," Nagel added. "Oil and gas prices continue to fluctuate, financial markets are extremely volatile, and there is great uncertainty. This is an uncomfortable situation, including from a monetary policy perspective."
Nagel's signals came amid general nervousness in global markets. Investors are closely watching developments in the Middle East, where rising energy prices are intensifying inflationary risks in the eurozone. In such an environment, the ECB's tightening of monetary policy is seen by analysts as a logical and necessary step to curb price pressures.
Markets reacted cautiously to the Bundesbank head's comments: leading European indices, including the German DAX, showed a moderate decline, reflecting overall investor caution in the face of global instability. Nevertheless, the direct confirmation of the high probability of a rate hike helped clarify the ECB's near-term plans and reduced uncertainty in the short term.
