European Central Bank to likely lower interest rates further in 2025, says ECB council member.
“We can still go a little bit lower in the interest rate level” said Joachim Nagel, a member of the European Central Bank’s council, to the news magazine Focus. “In the first half of 2025, we might reach a ‘neutral’ level without risking an increase in inflation.”
The inflation beast has at least been tamed, said the head of the German central bank. “We have the price increase under control. The core inflation, which is the inflation without the strongly fluctuating food and energy prices, is currently around 2.7%, and is likely to continue to decline. We also see a relaxation in wage agreements. The wage pressure is decreasing across the entire currency area.”
As a result, the ECB council might be able to further normalize its monetary policy, Nagel announced: “However, we will remain cautious. Overall, we are moving in an environment with high uncertainty. We are dealing with an enormous number of upheavals geopolitically: the Ukraine war, conflicts in the Middle East, economic policy tensions, and possible trade conflicts, to name a few.”
Nagel warned of Bitcoin, saying: “I get goosebumps when I hear the term ‘cryptocurrency’ and think of Bitcoin.” Bitcoin is not a currency, but a speculative object, he said. “Look at the price fluctuations, and that should make anyone who is looking for a solid investment think, let alone as a means of payment. As a central banker, I can only advise caution.”
The hype reminds him of earlier speculative bubbles, Nagel said. “One always has to ask: What is the substance? In the case of Bitcoin, there is only a mathematical algorithm, nothing more, no institution like central banks, no real value, unlike for example with stocks. Everyone who invests should be aware of this.” He himself has never invested in cryptocurrencies, “as a central banker in the ECB council, my investment options are subject to strict rules, but also as a private investor, I would not invest in crypto-values.