At the ECB’s annual forum in Sintra, policymakers reinforced that it’s is nearing the end of its easing cycle, even though further rate cut cannot be ruled out.
Chief Economist Philip Lane emphasized that the “last cycle” of battling post-pandemic inflation is over, having brought price growth down from 10% to near the 2% target. Still, he clarified that being “done” with the previous cycle does not rule out additional moves if circumstances change, particularly as the eurozone faces lingering uncertainty from global trade tensions and weak growth.
Belgian central bank chief Pierre Wunsch echoed the sentiment, saying the “job is mostly done” on inflation but that risks are now tilted to the downside. Wunsch added that ““if we have to move more it probably will be to the downside, a further cut.”
Latvian central banker Martins Kazaks added that any future moves would likely be small and designed as fine-tuning or “insurance cuts.” He cited Euro’s recent appreciation as a potential drag on inflation and exports, reinforcing the case for a cautious bias toward easing.
Vice President Luis de Guindos said that while the current EUR/USD exchange rate—hovering near 1.17—is not concerning, a rapid move beyond 1.20 would begin to pose challenges for inflation and competitiveness. “But 1.20 is perfectly acceptable.”
Lithuania’s Gediminas Šimkus also leaned dovish, stating that any next move would “be down,” though he remained cautious about timing. He said September might be too early to decide. Simkus added: “I believe a move, if any, is more likely towards the end of the year.”
