Energy prices will dictate whether the European Central Bank needs to hike interest rates into restrictive territory, Germany's central bank chief told CNBC on Friday.
"It's very much dependent on how the energy prices evolve, how the price picture is evolving over the course of maybe the next month," Joachim Nagel told CNBC's Annette Weisbach in an interview, the day after the ECB hiked its key interest rate by a quarter percentage point to 2.5%.
He was speaking as oil prices remained elevated, with global benchmark Brent crude and U.S. WTI both trading above $100 a barrel on Friday morning. European gas prices are also under pressure, with Dutch TTF futures hitting the highest level since 2022.
Nagel said he believed rates were currently at the upper end of neutral territory — when monetary policy is neither stimulating nor restricting economic growth — but he could not rule out the need to enter "mild restrictive territory."
Asked whether one or two more hikes were possible in the current cycle, Nagel said: "It's too early to speculate on this. What we see is that energy prices went up last week, now we are close to $110 [per barrel crude oil]."