Several ECB policymakers weighed in after the Governing Council held deposit rate steady at 2.00% yesterday.
Latvian member Martins Kazaks argued the central bank should not provide forward guidance given high geopolitical and economic uncertainty. He said December’s meeting will be crucial, as new staff forecasts will help determine whether inflation is deviating from target in a significant or persistent way.
Kazaks also flagged external factors, including the Euro’s strength— which can suppress import prices— and potentially deflationary Chinese exports as downside risks. “Uncertainty is high,” he said, adding this justifies a cautious, meeting-by-meeting policy stance.
Olli Rehn of Finland struck a similar note, warning about the disinflationary impact of cheaper energy and a stronger currency. He stressed the importance of avoiding inflation moving “too much below or too much above” the 2% objective,.
France’s Francois Villeroy de Galhau left the door open to further easing, saying “another rate cut is entirely possible” in coming meetings.
