ECB’s Nagel: Too early to speculate on rate hikes

The European Central Bank (ECB) Governing Council member Joachim Nagel said on Friday that its’ too early to speculate on rate hikes.

Key quotes

Too early to speculate on rate hikes.

Policy moves are dependent on energy prices.

I would not exclude we would need to go into mildly restrictive territoryI would not exclude we would need to go into mildly restrictive territory.

Market reaction

At the time of writing, the EUR/USD pair is down 0.01% on the day at 1.1610.

Nagel leans mildly hawkish as restrictive bias lifts Euro

Nagel’s 7.1/10 FXS Speechtracker score sits a full point above the 6.1/10 historic average, signaling a more hawkish tilt than usual. The warning that it is “too early to speculate on rate hikes” tempers expectations for an imminent policy reversal, keeping Euro rate-cut bets in check.

By stressing that policy moves are dependent on energy prices but not excluding a move into “mildly restrictive territory,” Nagel reinforces a bias toward tighter policy if inflation risks re-emerge. This combination of conditionality and openness to further restriction is likely to underpin the Euro on dips, especially against lower-yielding peers.