FRANKFURT (Reuters) – The European Central Bank is close to defeating inflation, even if the final steps are yet to be taken, Bundesbank President Joachim Nagel said on Wednesday, echoing the words of his French colleague.
Euro zone inflation dipped below 2% last month and will remain not far from 2% in the coming months, even if some increases remain in the pipeline, mostly due to base effects as energy costs were especially low a year earlier.
“If you look past the monthly ups and downs, you can see that price stability is not far off, but the last stretch of the road still has to be covered,” Nagel said in a speech.
Nagel highlighted stubbornly high inflation in services, currently running at 3.9%, as a particular concern, which required monitoring since this was the single largest item in the consumer price basket.
His comments were nearly identical to those of French central bank chief Francois Villeroy de Galhau, who earlier on Wednesday said victory against excessive inflation was “in sight”.
Most policymakers now expect inflation to hit the 2% target on a “durable basis” sometime around the middle of next year, well ahead of the bank’s previous projection for the final months of the year.
This has prompted calls from some policymakers to accelerate the pace of rate cuts, an argument Nagel appeared to push back on.
“Our data-dependent approach has proven its worth,” he said. “I advise remaining cautious and not rushing into anything.”
(Reporting by Balazs Koranyi; Editing by Gareth Jones)
