ECB's Nagel: Policy Options Remain Open for Both July and September Meetings
Miles Bennett
ECB Governing Council member Joachim Nagel said he is keeping all options open for the July and September rate meetings, calling the current situation "an open race" — this means → the timing of the next move after June's hike remains unresolved.
What exactly did Nagel say?
Speaking at the ECB's annual Sintra forum, Nagel was explicit: no guessing on future hikes — all policy options for July and September stay on the table.
He described the situation as "an open race" — a hike, a pause, or a wait-and-see are all live possibilities.
This means → even right after June's rate increase, the Governing Council has no internal consensus on whether to hike again immediately or hold.
Why does falling oil complicate the decision?
Nagel acknowledged the drop in oil prices was "genuinely surprising" in scale, but warned it is unclear whether the decline will stick.
One key source of uncertainty: the U.S.–Iran peace talks — their outcome directly shapes crude-supply expectations.
In plain terms = oil falling fast makes inflation look tamer, but if it is just a short-term swing, the ECB cannot pivot on it.
What are "second-round effects" in inflation?
Nagel noted: if first-round effects (direct energy and food price rises) are stronger, the probability of second-round effects (inflation feeds into wage growth, which pushes prices higher again) rises with them.
In plain terms = the first round is things getting expensive; the second round is wages catching up and making things *more* expensive — a self-reinforcing loop.
He added that "I have not yet seen this reaction" — this means → the wage–price spiral has not kicked in, giving the ECB more time to observe.
How is the market pricing the next hike?
The ECB completed its first rate hike since 2023 in June, and its own forecasts assumed further tightening ahead.
But energy costs fell sharply afterward, cooling market expectations of back-to-back hikes.
Markets currently price in one more hike this year — the debate is whether it lands in July or September.
What data should we watch next?
The eurozone's June CPI figure, released the same day, is a critical input — economists forecast year-on-year inflation easing slightly from 3.2% to 3%.
This means → a bigger-than-expected CPI drop weakens the case for September; stickier-than-expected inflation raises pressure to move in July.
Put simply = this one data point acts like a ballot — it helps the market and the ECB gauge how urgent the next move really is.
Content is for reference only, not financial advice.