ECB Managing Director Nagel: The central bank is in an advantageous position to deal with energy shocks. The interest rate decision in September keeps an eye on data and the situation in the Middle East

The Zhitong Finance App learned that ECB Management Committee member and Bundesbank President Joachim Nagel said on Friday that the ECB is currently in an advantageous position to meet the challenges posed by soaring energy prices, and emphasized that before deciding whether to raise interest rates in September, the large amount of economic data that poured in during the period should be fully assessed.

Nagel's speech comes as the ECB unanimously decided on Thursday to keep the three key interest rates unchanged, but at the same time sent a strong signal that the possibility of raising interest rates in September is rising. Recently, international oil prices have returned to around 100 US dollars per barrel, natural gas prices have also risen sharply, and pressure on energy costs has once again risen.

ECB President Lagarde revealed after the interest rate meeting that the current meeting did discuss interest rate hike options, but in the end they agreed to stay on hold. Part of the reason is that this round of soaring energy prices has not yet triggered an obvious second round of inflation.

In a statement, Nagle defended the decision to stay on hold, saying “it is right to keep key interest rates stable this time around.” He pointed out that the interest rate hike in June has put the ECB in an advantageous position, “enabling us to closely monitor subsequent developments.” But at the same time, he warned that the situation in the Middle East is highly fragile, and the central bank is still facing great uncertainty.

Currently, the tense situation in the Middle East is making the ECB's decision-making environment more complicated. As the US and Iran interrupted peace negotiations and resumed military attacks, the conflict further expanded this week. The Houthis in Yemen began attacking Red Sea vessels, and the situation around the Strait of Hormuz is uncertain.

Lagarde has paved the way for action in September, saying that some officials intend to raise interest rates this month. People familiar with the situation said that unless inflation prospects in the Eurozone improve markedly, policymakers are ready to raise interest rates again at the next meeting.

Looking ahead to the next monetary policy meeting on September 10, Nagle reiterated the ECB's traditional position of never promising any interest rate decisions in advance. “We will have lots of new data and new forecasts in September, and we will re-evaluate the inflation outlook at that time,” he said.