(Bloomberg) -- The European Central Bank has made good progress in bringing inflation down, but needs patience to fully reach the 2% target, Governing Council member Joachim Nagel said.
“We must now show staying power,” the Bundesbank president said Wednesday. “If we can do that, then we’ll soon make it to the finish line on our run.”
Speaking at a Commerzbank event in Frankfurt, he said the future path for interest rates is open, but that borrowing costs “will certainly not go down as quickly and sharply as they went up.”
The ECB last week lowered its deposit rate for the second time since June with inflation receding toward 2% and concerns about the economy growing. It remained tight-lipped, though, on the pace and extent of further easing.
Since then, several Governing Council members including President Christine Lagarde have signaled that another cut is more likely in December than at next month’s meeting, without completely ruling out the latter — in line with bets by money markets.
Nagel said the disinflation process is “tenacious,” also because wage growth only eases slowly. Price pressures in the services sector also remain “alarmingly high.”
The outlook for the euro-area economy is uncertain, he said — not least due to US elections in November.
On further rate cuts, he said that “depending on incoming data, the time intervals between potential steps may vary.” The ECB’s stance “must remain sufficiently tight for long enough.” ECB projections are based on corresponding assumptions, he said.
Earlier Wednesday, France’s Francois Villeroy de Galhau said the ECB should continue to lower rates as inflation is set to return durably to 2% next year.
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