ECB official urges flexibility amid inflation risks as Le Pen proposes French deficit cuts

Joachim Nagel, a member of the European Central Bank (ECB) Governing Council and President of the Bundesbank, has emphasized the need for ECB flexibility due to geopolitical uncertainties affecting inflation. Speaking in Sorrento, Italy, Nagel noted that instability in the Middle East and potential disruptions in the Strait of Hormuz could drive up oil and natural gas prices. He highlighted that European gas reserves remain low, making prices particularly vulnerable. Despite these risks, Nagel observed that the Eurozone economy has shown more resilience than expected, with domestic demand expected to drive growth.

In France, Marine Le Pen, leader of the National Rally, has proposed a plan to drastically reduce the national deficit to 3.7% by 2027 and 2.2% by 2032. This move is intended to reassure investors and signal that France can remain a reliable partner. Le Pen has also called for ECB intervention to lower France's borrowing costs. While her platform includes spending commitments such as fuel tax cuts and pension protections, she has introduced a ‘golden rule’ to mandate debt-reducing budgets.