European Central Bank (ECB) policymaker and Germany’s central bank head Joachim Nagel said on Friday that the ECB policy rate is still in expansionary territory and added that they have to move it into restrictive territory, as reported by Reuters.

"We must resolutely raise our key rates further and adopt a restrictive stance," Nagel said. "We cannot stop here. Further decisive steps are necessary."

Regarding the balance sheet reduction, "we should start reducing the size of our bond holdings at the beginning of next year by no longer fully reinvesting all maturing bonds," Nagel said.

Market reaction

EURUSD showed no immediate reaction to these comments and was last seen posting small daily gains at 1.0365.