FRANKFURT, July 24 - Bundesbank President Joachim Nagel said on Friday that the European Central Bank is in a favourable position to address recent upward pressure on energy prices, but stressed the need to assess incoming data before committing to any interest-rate move in September.
Nagel noted that the ECB left its policy rate unchanged at the meeting on Thursday, yet provided clear indications that a rate increase in September remains a probable outcome. He pointed to the rebound in oil prices toward the $100 per barrel mark and a concurrent surge in natural gas prices as factors that have altered the backdrop for monetary policy deliberations.
"The rate hike in June already put us in a good position from which we can monitor further developments closely," Nagel said in a statement. He underlined that developments in the Middle East continue to be fragile and that "we are still facing intense uncertainty." The Bundesbank chief emphasised that these elements warrant careful surveillance rather than pre-commitment to future action.
ECB President Christine Lagarde told colleagues on Thursday that a rate increase was discussed during the meeting, but the decision to remain on hold was reached unanimously. According to Nagel, part of the reason for standing pat was that the current energy-price surge is not yet producing second-round inflation effects that would feed through more broadly into wage and price setting.
Nagel argued the ECB should refrain from promising any particular path for policy and instead conduct a thorough analysis of the substantial body of data expected before the next policy meeting, scheduled for September 10. That approach, he suggested, allows the central bank to calibrate its response to whether energy-driven price pressures intensify and start to influence broader inflation dynamics.
The comments come as oil trades back near $100 a barrel and natural gas prices climb - developments that have heightened attention on the central bank's coming choices. While Thursday's unanimous pause reflected current assessment that second-round inflation effects are not yet apparent, policymakers signalled that further action remains on the table depending on how incoming data evolve.
Summary
Joachim Nagel said the ECB is well positioned after the June rate increase to observe evolving energy-market developments. He urged a data-dependent approach ahead of the September 10 meeting and noted ongoing fragility in the Middle East and significant uncertainty. The ECB left rates unchanged on Thursday, with a discussion about raising rates having taken place but a unanimous decision to hold due in part to an absence of second-round inflation impacts so far.