ECB Nagel is saying:
- More rate cuts could threaten price stability
The ECB kept rates unchanged yesterday at their meeting.
Overnight, a number of ECB officials spoke the "day-after" the interest rate decision where the central bank keep rates unchanged for the 2nd consecutive month:
- Rehn cautioned that downside risks to inflation remain, particularly from cheaper energy and a stronger euro. He emphasized that the risk of inflation staying below target should not be underestimated, recalling that the ECB’s latest projections for 2026 HICP (1.7% y/y) came in below both expectations and the 2% target.
- Kocher noted that Austrian inflation remains far above the eurozone average. He said the growth and inflation outlooks have changed little since the meeting, stressing that policy will continue to be decided meeting-by-meeting as the risk landscape evolves. He added that overall risks are balanced.
- Muller stated that interest rates are currently at the right level, suggesting comfort with the ECB’s present policy stance.
- Kazak̦s argued that risks remain elevated, backing a meeting-by-meeting approach. He described the December meeting as “rich,” hinting at significant discussions or decisions ahead.
- Villeroy left the door open to another rate cut in the coming meetings, stressing that upside risks to inflation are less concerning than downside ones. He also said France can and must address its budget issues.
- Simkus countered that inflation has stabilized at target, the labor market is in good shape, and economic activity is stronger than previously observed. Still, he warned that inflation risks remain significantly high.
