ECB Governing Council member Boris Vujcic acknowledged the restrictive nature of the ECB’s present stance. However, he tempered this by highlighting the uncertainty that remains, suggesting that the real test of the bank’s approach lies ahead.
“Whether we are in a restrictive-enough territory remains to be seen. And this is something that you will only see from the inflation data that will come in the next prints,” he emphasized.
Despite indications of a cooling economic activity, Vujcic pointed out that this deceleration is not as evident in the current inflation rates. The upcoming months, according to him, will be crucial in discerning the direction of services inflation and in understanding “whether we will feel the consequences of the slowdown in the labor market.”
While ECB expects to reach its 2% inflation target in 2025, Vujcic said that “by spring next year, we will have a clearer picture of whether we are firmly on the path toward achieving that or we will have to do more.”