Inflation in the Eurozone will continue to decline in the coming months, even if at a slower pace, German Central Bank (Bundesbank) President Joachim Nagel said in an interview published on Sunday by the Cypriot daily Kathimerini, Agerpres reports.

Eurozone annual inflation fell to 2.4% in November from 2.9% in October, marking the third month in a row that eurozone inflation recorded a better-than-expected decline. Events in recent months have fueled speculation that the European Central Bank’s benchmark interest rate could be cut faster than the Frankfurt-based institution’s current guidance suggests.

“We haven’t won the fight against inflation yet,” says Joachim Nagel, who visited Cyprus in recent days. The president of the Bundesbank called inflation “a greedy and stubborn animal” and emphasized that the next stage of the fight against inflation will be more difficult.

“And in a scenario where escalating geopolitical tensions could mean higher inflation, it’s clear that it would be too early to declare victory on high inflation,” said Nagel, one of the most influential voices on the ECB’s Governing Council.

“I can’t say whether interest rates have reached their maximum level”

“I cannot say whether interest rates have reached their maximum level. In the Governing Council of the ECB, we make decisions on the level of interest rates at each meeting, based on an approach that depends on statistical data,” Nagel emphasized.

The president of the Bundesbank added that inflation forecasts are softened by the reduction of base effects and the cancellation of measures introduced by many European countries to limit high energy prices. On the other hand, Nagel pointed to the expected continuation of consecutive wage increases.

“Overall, I expect inflation to continue to decline, but at a slower pace and perhaps with some shocks,” Nagel concluded.

Earlier, ECB President Christine Lagarde said the European Central Bank could not yet declare victory over inflation and would have to remain vigilant until inflation returned to its 2% target. “We faced an important inflationary shock and reacted with an important adjustment of monetary policy. The effects of this adjustment are beginning to be felt, and inflationary pressures are easing. But our journey is not over. Our monetary policy is at a stage where we have to be attentive to the various factors affecting inflation, but always focused on our mandate for price stability,” the ECB president warned in a speech a week ago in Berlin.

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