ECB policymaker Joachim Nagel says rates may move to restrictive territory if energy prices stay high

Joachim Nagel, a policymaker at the European Central Bank, indicated that future interest rates might need to rise further if persistent high energy prices continue. Nagel told Reuters on Friday that current policy levels are already at the upper end of a neutral range, meaning the money policy neither stimulates nor slows activity significantly. He warned that sustained pressure from war-inflated fuel costs could force the central bank beyond this neutral zone into mild restriction. This assessment follows the ECB raising its benchmark rate to 2.50 percent on Thursday for the second time this year. Nagel emphasized that the outlook depends heavily on the trajectory of energy prices and inflation trends over the coming weeks. Higher fuel costs pose risks to economic growth and could make it difficult for inflation to return sustainably to the target.