ECBs Nagel: Considers further rate hikes as inflation risk persist

ECB Nagel is cautious about recent inflation developments and says he may favor raising rates. Longer-term inflation expectations are above target, and reducing the balance sheet is suggested. Rate cuts are not yet on the table.

The ECB is not yet satisfied with the recent developments in inflation.
Further rate hikes remain a possibility as inflation risks are still on the upside.
Longer-term inflation expectations continue to be significantly above the 2% target.
Advocacy for a reduction in the ECB's balance sheet, which could be accelerated.
It is currently too early to consider rate cuts.

Meanwhile, the euro zone CPI data today was weaker than expected.

Flash CPI 2.4% versus 2.7% expected and 2.9% last month
Core flash CPI 3.6% versus 3.9% expected and 4.2% last month

Yes inflation remains above target but progress is being made to the downside