ECB’s Nagel says further rate cuts would threaten price stability

(Reuters) -Further interest rate cuts could jeopardise hard-won price stability as the euro zone economy is already set for a boost from rising German public spending, ECB policymaker Joachim Nagel said in an interview published on Friday.

The European Central Bank (ECB) left interest rates unchanged on Thursday, as expected, and maintained an upbeat view on growth and inflation, dampening expectations for any further cuts in borrowing costs.

"We have decided to leave our key interest rates unchanged in the current situation because the latest forecasts indicate that inflation is roughly in line with our medium-term objective," Nagel, who is also the President of Germany's Bundesbank, told Italian daily Il Sole 24 Ore.

"Further interest rate cuts could jeopardize this objective," he added.

Nagel said increased spending in Germany on defence and infrastructure were already acting as a stimulus for the euro zone economy. "This is having an impact throughout Europe," he said.

(Reporting by Romolo Tosiani in Gdansk, editing by Alvise Armellini)

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