HomeLive CommentsECB's Vujcic advocates gradual approach to future rate cuts

ECB’s Vujcic advocates gradual approach to future rate cuts

ECB Governing Council members Boris Vujcic and Gediminas Simkus have underscored the importance of a cautious approach to future interest rate reductions. In separate interviews occasions, both officials emphasized the need for patience in evaluating economic data before committing to rate cuts.

Boris Vujcic highlighted the necessity of ensuring that inflation is “firmly sustainably on the way” towards ECB’s medium-term target. He emphasized a gradual approach, stressing that ECB should wait for sufficient data to validate a downward trajectory in inflation rates.

Vujcic also expressed a preference for rate cuts in increments of 25 basis points, though he did not exclude the possibility of larger steps if warranted by economic data.

Gediminas Simkus, on the other hand, indicated that a rate cut in March is unlikely. He suggested that the likelihood of rate reductions would increase as 2024 progresses, describing this increase as “exponential, not linear.” This statement implies a growing possibility of monetary easing later in the year, contingent upon evolving economic indicators.

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