During an interview, Pierre Wunsch, a member of the European Central Bank's Governing Council, stated that as inflation eases, the ECB may continue to cut interest rates, potentially bringing them down to "close to 2% levels."
According to Zhiyu Finance APP, Pierre Wunsch, a member of the European Central Bank's Governing Council, stated during an interview that as inflation eases, the ECB may continue to cut interest rates, potentially bringing them down to "close to 2% levels."
He indicated that if the inflation rate slows down to the target level sooner than expected, officials would have reason to "gradually cut interest rates." He pointed out: "We might even have to discuss lifting restrictions." However, he warned against taking larger measures.
"If you suddenly accelerate interest rate cuts while domestic inflation is still above 2.5%, I'm not sure we would send a very good signal," he said, "People might think we have a much more negative view of the economy."
The European Central Bank will hold a meeting on December 12, and the market anticipates that the bank will make its fourth interest rate cut of the year. Despite rumors that the bank would cut rates by 50 basis points after economic data showed weakness, several officials indicated they prefer a "gradual" approach.
Yannis Stournaras, the governor of the Bank of Greece, hopes for rate cuts at each meeting until rates are lowered from the current 3.25% to 2%. Executive Board member Isabel Schnabel pointed out in an interview this week that borrowing costs could drop to neutral levels, but she acknowledged it is difficult to specify where that level might be.
Regarding Trump's return to the White House, Wunsch stated that U.S. trade tariffs could lead to a weaker euro, "If that is the case, the impact of tariffs may slightly trigger inflation."