The European Central Bank should avoid cutting interest rates too fast because it has yet to bring inflation down to 2% even if that goal is now in sight, ECB policymaker Joachim Nagel said on Thursday.
"Taken together, a timely return to price stability cannot be taken for granted," Nagel, the Bundesbank's president, said in a speech. "Therefore, we need to be careful and must not lower policy rates too quickly,"
The ECB is widely expected to cut borrowing costs on Sept. 12 after bringing inflation from double digits in late 2022 down to 2.6 % in July, though it does not expect price growth to stabilise at its target until late next year.
Nagel, one of the hawks who favour higher rates, acknowledged that the target was now close but saw risks coming from higher wages and a stronger economic recovery. "While our 2 % target is in sight, we have not reached it," he added.
