Too early to discuss cutting rates: ECB Policymaker

Rate cuts: It is too early for the European Central Bank to discuss cutting interest rates as inflation continues to remain high, ECB Policymaker Joachim Nagel said on Monday.

The Bundesbank President, a policy hawk who favours higher rates, was once again pushing back against market expectations for the ECB to begin lowering borrowing costs from the spring.

"It's too early to talk about cuts, inflation is too high," said Nagel, while further saying, "I want to see new data. We will wait for the next Governing Council meeting and we will see," citing a Bloomberg report.

Money markets price in nearly 150 basis points worth cuts to the ECB's deposit rate this year, most likely starting from April.

However, Nagel also mentioned that the mistake of lowering interest rates too early should be avoided.

"Maybe, we can wait for the summer break or whatever but I don't want to speculate," Nagel said.

Austrian Economist Robert Holzmann said one should not "bank" on the ECB cutting rates at all in 2024 in light of conflicts in the Red Sea pushing up the cost of shipping through the Suez Canal.