They Said It - Recent Comments of ECB Governing Council Members

10 November 2023

By David Barwick – FRANKFURT (Econostream) – The following is an overview of recent comments made by European Central Bank Governing Council members. We include only comments made since the Governing Council meeting of 26 October, but earlier comments can still be seen in versions up to that of 25 October.



Cipollone (ECB)


de Cos (Banco de España)


de Guindos (ECB)


Centeno (Banco de Portugal)


Elderson (ECB)


Herodotou (Central Bank of Cyprus)


Holzmann (Austrian National Bank)


Kazāks (Latvijas Banka)


Kažimír (National Bank of Slovakia)


Knot (Dutch National Bank)


Lagarde (ECB)


Lane (ECB)


Makhlouf (Central Bank of Ireland)


Müller (Eesti Pank)


Nagel (Bundesbank)


Panetta (Banca d’Italia)


Reinesch (Central Bank of Luxembourg)


Schnabel (ECB)


Scicluna (Central Bank of Malta)


Šimkus (Bank of Lithuania)


Stournaras (Bank of Greece)


Välimäki (Bank of Finland)


Vasle (Banka Slovenije)


Villeroy (Banque de France)


Vujčić (Croatian National Bank)


Wunsch (National Bank of Belgium)


Christine Lagarde (ECB)
10 November 2023

‘[T]he level where we are at the moment, if we sustain it for long enough – and we can debate that of course – will make a significant contribution to bringing inflation back to our 2% target in the medium term. Now this is of course the loaded language that we have negotiated amongst ourselves and which tries to express that given our baseline, given what we expect of the economy developments going forward, we are at a level where we believe that if kept long enough - and this “long enough” is not trivial - will take us to the 2% medium-term target. Now two additional components maybe. Number one, this is really the baseline that we have produced in our latest projection in September, and they’re predicated on no major shocks coming up. If major shocks come up, depending on the nature of the shocks, we will have to revisit that statement. The second thing is “sustained for long enough”. And for that we are going to be data-dependent. I know that there are lots of questions around, and predictions around, as to how long will be long enough, how much time will be required for that to be sustainable, as we have called it. And it must be data-dependent. That’s really what we are committed to. What I can tell you, though – and I’m not, you know, contradicting what I just said – is that long enough is long enough. And it’s not something that is, you know, in the next couple of quarters we’ll be seeing a change. It seems to us, given the three criterias that we look at, which is the inflation outlook, which is underlying inflations and which is the strength of monetary policy transmission, “long enough” has to be long enough.’

‘We should not assume this 2.9% respectable headline rate [in October] can be taken for granted. Even if energy prices were to remain where they are, there will be a resurgence of probably higher numbers going forward and we should be expecting that.’

04 November 2023

‘We are determined to bring inflation down to 2%. According to our projections we will get there in 2025.’

‘Is the price of food going to be higher in the future? That’s a possibility if you look at the impact of climate change, for example. Droughts, floods, higher temperatures and rising sea levels will most likely have an impact on food prices going forward.’

26 October 2023

‘The incoming information has broadly confirmed our previous assessment of the medium-term inflation outlook. Inflation is still expected to stay too high for too long, and domestic price pressures remain strong. At the same time, inflation dropped markedly in September, including due to strong base effects, and most measures of underlying inflation have continued to ease. Our past interest rate increases continue to be transmitted forcefully into financing conditions. This is increasingly dampening demand and thereby helps push down inflation. We are determined to ensure that inflation returns to our 2% medium-term target in a timely manner. Based on our current assessment, we consider that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. Our future decisions will ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary. We will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction. In particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.’

‘The euro area economy remains weak. Recent information suggests that manufacturing output has continued to fall. Subdued foreign demand and tighter financing conditions are increasingly weighing on investment and consumer spending. The services sector is also weakening further. … The economy is likely to remain weak for the remainder of this year. But as inflation falls further, household real incomes recover and the demand for euro area exports picks up, the economy should strengthen over the coming years. Economic activity has so far been supported by the strength of the labour market. T… At the same time, there are signs that the labour market is weakening. Fewer new jobs are being created, including in services, consistent with the cooling economy gradually feeding through to employment.’

‘In the near term, it [inflation] is likely to come down further, as the sharp price increases in energy and food recorded in autumn 2022 will drop out of the yearly rates. … Most measures of underlying inflation continue to decline. At the same time, domestic price pressures are still strong, reflecting also the growing importance of rising wages. Measures of longer-term inflation expectations mostly stand around 2%. Nonetheless, some indicators remain elevated and need to be monitored closely.’

‘The risks to economic growth remain tilted to the downside. Growth could be lower if the effects of monetary policy turn out stronger than expected. A weaker world economy would also weigh on growth. Russia’s unjustified war against Ukraine and the tragic conflict triggered by the terrorist attacks in Israel are key sources of geopolitical risk. This may result in firms and households becoming less confident and more uncertain about the future, and dampen growth further. Conversely, growth could be higher than expected if the still resilient labour market and rising real incomes mean that people and businesses become more confident and spend more, or the world economy grows more strongly than expected. Upside risks to inflation could come from higher energy and food costs. The heightened geopolitical tensions could drive up energy prices in the near term, while making the medium-term outlook more uncertain. Extreme weather, and the unfolding climate crisis more broadly, could push food prices up by more than expected. A lasting rise in inflation expectations above our target, or higher than anticipated increases in wages or profit margins, could also drive inflation higher, including over the medium term. By contrast, weaker demand – for example owing to a stronger transmission of monetary policy or a worsening of the economic environment in the rest of the world amid greater geopolitical risks – would ease price pressures, especially over the medium term.’

‘…neither the PEPP, nor the remuneration of required reserves have been discussed at this meeting.’

‘So how long is “sufficiently long”? Obviously, we refer to “timely manner”, “sufficiently long”, but in the same breath I say we shall be data dependent. At this point of our fight against inflation and after ten successive hikes, now is not the time for forward guidance. Now is the time to really stick to our data dependency ‘knitting’ if I may say and we shall do so. We have acknowledged on the occasion of this meeting that our assessment is confirmed, the assessment that we had in September. All numbers, if anything, have reinforced our assessment of the situation. We have applied the three criteria that you all know well; the inflation outlook, duly informed by any information that we have, the underlying inflation in all its compositions and the strength of the transmission of monetary policy. So, we will continue to be data dependent. Your second question was essentially when and at what level do you cut? This was not discussed at all, and the debate would be absolutely premature. We have acknowledged in our review of the macroeconomic situation back in September and yet again this time around, and we all know, and you know, that labour cost, wages, profit units – the analysis of that – is critically important to determine the inflation outlook. And we will continue to accumulate data. On labour, for instance, we are going to have a wealth of numbers and data, and intelligence, when collective bargaining agreements and annual negotiations in 2024 will be completed. That is way into 2024. That is only a “for instance.” Even having a discussion on a cut is totally premature. For the moment, what we are saying is that we have to be steady, we have to hold. This is the decision of today. We are holding.’


Isabel Schnabel (ECB)
02 November 2023

‘Our estimates suggest that, should energy prices over the coming months increase in line with their historical mean, energy is estimated to add nearly 1.9 percentage points to euro area headline inflation by July 2024. This primarily reflects the strong decline in oil and gas prices observed since November 2022. A rise in energy prices over and above the historical mean would further amplify such base effects. The extraordinarily sharp rise in food prices in 2022 and early 2023 implies that similar dynamics for headline inflation may occur, at some point, for the food component of the HICP.’

‘Our indicators, especially those tracking recently signed wage agreements, point to continued strong wage growth at a time when inflation is already falling. These are the slow-moving second-round effects of the adverse supply-side shocks that hit the euro area economy in previous years. Meagre productivity growth is putting additional pressure on firm’s unit labour costs, which have been rising sharply since the beginning of 2022. The distribution of price changes illustrates these rigidities. In September, around 45% of services prices, weighted according to their share in the HICP basket, were still increasing at a rate above 5%, with this share declining only very slowly. In the goods sector, the share of products seeing particularly strong price increases started to decline earlier. But even in this sector, still nearly 40% of products are currently rising at a rate above 5%. Given these rigidities, disinflation will slow down appreciably. For core inflation to evolve in line with ECB staff projections, two key conditions need to be met. One is that the growth in unit labour costs eventually falls back to levels that are broadly consistent with 2% medium-term inflation. The second is that firms will use their profit margins as a buffer to limit the pass-through of the current strong wage increases to consumer prices. The last mile is about ensuring that these two conditions materialise in a timely manner. That process faces two key challenges. The first is the appropriate calibration and transmission of monetary policy. The second is the potential occurrence of new supply-side shocks.’

‘It is unclear how long the transmission through the labour market will remain muted. It is reasonable to assume that the longer economic activity stagnates, the harder it will be for firms, most notably small and medium-sized firms, to hoard labour. And indeed, we are seeing first signs that the labour market is softening and demand for labour slowing. But the more slowly this process unfolds and the weaker it is, the higher the risks that persistent labour market tightness will challenge the assumptions underlying the projected decline in core inflation. In particular, unit labour costs may grow more strongly than projected as labour hoarding continues to weigh on productivity growth and labour shortages support favourable wage bargaining conditions at a time when workers are still trying to make up for the substantial losses in their purchasing power. Higher unit labour costs, in turn, raise the risk that firms pass a larger part of their cost increases on to final consumer prices, which could lay the ground for a wage-price spiral.’

‘Although our determined monetary policy decisions have secured the broad anchoring of long-term inflation expectations, surveys and financial market prices continue to point to concerns that inflation may stay elevated. For example, the distribution of longer-term inflation expectations in our survey of professional forecasters, while remaining broadly anchored around our target, has shifted visibly to the right compared with the periods before and during the pandemic, with risks to the inflation outlook being tilted to the upside. Similarly, risk premia in the swap market for inflation far into the future remain elevated.’

‘Perseverance is needed to avoid declaring victory too early. With our current monetary policy stance, we expect inflation to return to our target by 2025. The progress on inflation that we have seen so far is encouraging and in line with our projections. We therefore decided to leave our key policy rates unchanged at last week’s monetary policy meeting. However, the disinflation process during the last mile will be more uncertain, slower and bumpier. Continued vigilance is therefore needed. After a long period of high inflation, inflation expectations are fragile and renewed supply-side shocks can destabilise them, threatening medium-term price stability. This also means that we cannot close the door to further rate hikes. If we stay vigilant, we will be able to spot early on any risks to the inflation outlook that are materialising, just as the runner listens to the signals from her body. This means that we need to carefully monitor all incoming data and continuously verify whether they are consistent with the assumptions underlying our projections. Data dependence ensures that our monetary policy is at all times calibrated in accordance with the circumstances we are facing. The inflation target is now within reach, but let’s celebrate only once we have truly tackled the last mile.’


Philip Lane (ECB)
09 November 2023

‘In particular, the appropriate level of central bank reserves can be expected to remain much higher and be more volatile in this new steady state compared to the relatively low levels that prevailed before the global financial crisis (GFC). Amongst other factors, the extraordinary macro-financial risk episodes (the GFC, the euro area sovereign debt crisis, the pandemic) in the last 15 years have underlined the importance of financial institutions maintaining significant liquidity levels.’

‘In the coming years, the ongoing reduction in the footprint of the ECB in the bond market and the repayment of TLTRO funds can be expected to continue to put upward pressure on term premia and contribute to lower credit creation. In turn, these contractionary forces lower the projected paths for GDP and inflation and thereby reduce the level of the policy rate required to stabilise inflation at the medium-term target (compared to a counterfactual in which monetary policy tightening was not accompanied by balance sheet reduction).’

08 November 2023

The inflation drop so far ‘is not something we should take a lot of comfort from’.

‘Over the next year, inflation will probably still be around 3%, high 2s, low3s … and it’s only in 2025 … that we will see a return to 2%. … the overall message here is that inflation will come back to 2%.’

To get to that, ‘there’s a lot of distance still to cover. … Next year we need to see wages still grow more than normal, but to decelerate. We need to see some of those wage increases absorbed by profits…’

‘[N]ext year the economy will grow in a kind of normal way’, he said. The ECB sees the economy ‘really kind of turning around from early 2024 onwards.’

‘We need to see the deficits in Europe narrow. Not dramatically, but in a significant way.’

 ‘Having inflation coming back from 10% to 3% was more supply policy than monetary policy.’

‘If the transmission is weaker, the injection of interest rates has to be stronger.’


Luis de Guindos (ECB)
09 November 2023

‘[W]e are maintaining interest rates at their current level, and we believe that this will substantially contribute to bringing inflation back down to the 2% level we define as price stability. The evolution of inflation has been positive overall: it was above 10% only one year ago and it has now fallen to 2.9%. At the same time, core inflation has also been moderating. But we have to be prudent and cautious, as there are some risks around the outlook for inflation over the next few months. We will continue taking a meeting-by-meeting and data-dependent approach to interest rate decisions.’

‘We expect that growth will stagnate in the second half of the year and that the fourth quarter will not differ much from the third. Our most recent projections indicated some downside risks to growth; some of these risks have now started to materialise and this will have an impact on inflation.’

‘It might be premature to say it, but leading indicators point to the growth outlook being somewhat more negative than we previously projected. As regards inflation, the evolution may not be very different from what we projected in September.’

‘Recent data on headline inflation figures have been quite positive, and we are glad to see that underlying inflation is coming down, as one of our main concerns in the past was how sticky core inflation was.’

‘Any discussion about lowering interest rates is clearly premature.’

‘It is essential to focus on core inflation, for which there are several risks. First, there may be another energy shock that would eventually affect both headline and core inflation. Second, there is the evolution of the euro exchange rate, which we do not target but which nonetheless plays a role in inflation. And finally, there are unit labour costs. Rising labour costs result from two factors. The first one is wage developments, with wage growth in the euro area now at just over 5%. The second is productivity, which is very low and has been declining because employment growth has been outpacing output growth. It is true that profit margins grew even faster than unit labour costs last year. This year, however, we are seeing a moderation in profit margins, while labour costs are on the rise. Our expectation is that part of the increase in labour costs will be absorbed via profit margins, meaning that not all of this increase will be passed through to final prices.’

07 November 2023

‘We have seen a quarterly rate of -0.1%, I wouldn't read too much into it either, +0.1% or -0.1%, but it's pretty much a stagnant situation, we think it's going to continue in the fourth quarter.’

31 October 2023

‘[I]nflation is expected to continue to slow down in the next months.’

‘In the last Governing Council meeting, we decided to stop rising interest rates. The message here is that if we keep rates at this level, inflation will eventually converge to our price stability definition of 2%.’

30 October 2023

‘The euro area economy remains weak. Foreign demand is subdued and tighter financing conditions are increasingly weighing on investment and consumer spending. The services sector is also losing steam, with weaker industrial activity spilling over to other sectors, and the impact of higher interest rates is broadening. Recent indicators point to continued weakness in the near term. The labour market has been a bright spot supporting the euro area economy and has, so far, remained resilient to the slowdown in growth. But there are signs that it is turning. While unemployment stood at 6.4% in August, the lowest level recorded since the start of the euro, fewer new jobs are being created, including in services, which suggests that the cooling of the economy is gradually feeding through to employment. Moreover, the risks to the growth outlook are tilted to the downside. Growth could be lower if the effects of monetary policy transmission turn out stronger than expected, or if the world economy weakens further. Furthermore, major geopolitical risks have intensified and are clouding the outlook. This may result in firms and households becoming less confident and more uncertain about the future, and dampen growth further. At the same time, while remaining significantly above our medium-term target of 2%, recent inflation data have been in line with our expectations, confirming that our monetary policy is working. Inflation dropped sharply to 4.3% in September and the fall was visible in all its major components. Food price inflation decreased again, but – at 8.8% – remains high by historical standards. Energy prices fell by 4.6%, but have risen again more recently, and have become less predictable in view of the new geopolitical tensions. Inflation excluding energy and food also dropped to 4.5% in September, and we see continued declines in measures of underlying inflation. However, domestic inflation remains strong owing to the growing importance of wage pressures. The inflation outlook remains surrounded by significant uncertainty. In particular, heightened geopolitical tensions could drive up energy prices and higher than anticipated increases in wages could drive inflation higher. By contrast, a stronger transmission of monetary policy or a worsening of the global economic environment would ease price pressures.’

‘The incoming information has broadly confirmed our previous assessment of the medium-term inflation outlook. Inflation is still expected to stay too high for too long, and domestic price pressures remain strong. At the same time, inflation dropped markedly in September and most measures of underlying inflation have continued to ease. Past interest rate increases continue to be transmitted forcefully into financing conditions, which is helping to push down inflation. We consider that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our 2% medium-term target. Our future decisions will ensure that policy rates will be set at sufficiently restrictive levels for as long as necessary. By the December meeting, we will have GDP growth data for the third quarter of the year, the inflation figures for October and November, and a new round of projections. We will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction. As the energy crisis fades, governments should continue to roll back the related support measures. This is essential to avoid driving up medium-term inflationary pressures, which would otherwise call for even tighter monetary policy.’


Piero Cipollone (ECB)


Frank Elderson (ECB)


Joachim Nagel (Bundesbank)
10 November 2023

‘Let's start … with the current inflation environment. We can see that things are moving in the right direction. … But the inflation rate is still too high. The forecasts show only a slow decline towards the target value of 2%. And the uncertainty remains high. In the Governing Council of the ECB, we are determined to achieve price stability, i.e. to bring the inflation rate back down to 2% soon. To achieve this, the key interest rates will have to remain at a sufficiently high level for a sufficiently long time.’

08 November 2023

‘I understand that slowing down the economy to tame inflation is unpopular. But, to achieve price stability, supply and demand have to be re-aligned. And this meant, and still means, that aggregate demand must be restricted.’

‘Our tightening of monetary policy has contributed to the dampening of economic activity. And, in lockstep, profits have already made a significantly smaller contribution to domestic inflation in the second quarter of 2023 than in the quarters before. I am therefore expecting firms’ profits to moderate in the coming quarters and absorb some of the recent strong increases in wages. If profits were to rise strongly instead, high inflation would be more persistent. And this would call the Eurosystem to action.’

‘…if real wage growth exceeds the economy’s growth potential for an extended period of time, firms would pass at least some of these cost increases on to consumers. And this, of course, could mean higher inflation. This would again prompt a response from the Eurosystem. Currently, we are expecting wage increases to have some effects on prices. But we do not see any evidence of a self-reinforcing spiral. We will continue to carefully monitor whether the price and wage-setting behaviour will normalise and align more closely with our inflation target. Otherwise – as you may have guessed by now – the Eurosystem will be called to action.’

‘First, in the current environment of high inflation, fiscal policy needs to be restrictive. Expansionary fiscal policy could spur aggregate demand and increase existing inflationary pressures. So I’m happy to see deficit ratios declining in the euro area. In many cases, this is related to the phase-out of the crisis response measures. I see the risk of an underlying expansionary trend gaining traction.’

‘We will continue to follow a data-dependent approach. At our next meeting in December, we will have more hard data, and, most importantly, new Eurosystem staff forecasts. We will then decide how to proceed on that basis. Ladies and gentlemen, given the visible economic slowdown, the “last mile” before we reach our inflation target may well be the hardest. In this situation, it is helpful to recall the sequence of monetary policy transmission. Monetary policy tightening is first transmitted to broader financing conditions. Tighter financing conditions then slow down the real economy. This is where we are right now. And, with another time lag, the slowdown of economic activity puts downward pressure on inflation. Monetary policy has already started to dampen inflation. And it will continue to do so in 2024 and 2025. We will stay the course. I am firmly convinced and personally committed: The Eurosystem will ensure that inflation returns to our 2% target. We will achieve price stability.’

07 November 2023

‘At its last meeting in October, the ECB Governing Council opted to stay the course and leave rates unchanged. This appears justified, as we have achieved a reasonable degree of tightening, and inflation pressures have subsided somewhat in the past months. Nevertheless, inflation rates in the euro area are still too high. And they have been too high for too long. Inflation is still forecast to remain above target for the entire horizon of the latest ECB staff projection. Lively wage growth combined with a decreasing labour supply will keep the pressure up. It is imperative to remain vigilant. As we know, monetary policy measures take time before their full effect becomes visible. There is a lot of uncertainty surrounding the outlook, and we still face risks that the inflation outlook could turn out higher than expected. The Governing Council will continue to follow a data-dependent approach. And it will continue to be guided by a clear objective: we will maintain a sufficiently high level of the monetary policy rate for as long as necessary to ensure that inflation returns to 2%.’

01 November 2023

‘But one thing is clear: uncertainty in this form [Middle East violence] is usually not good for economic processes and is therefore also relatively bad for growth prospects. But as I said, it is still too early to ultimately make a final economic judgment. … Of course, as monetary policymakers and central banks, we look at things like this and think about how we could react if necessary. But I can tell you one thing: If it were necessary, we are positioned to respond to it.’

‘The important message first is that inflation is falling. This means that monetary policy is working, and that is a good message. If you can still remember: last year we still had double-digit inflation rates. The inflation rate has now fallen to just under 4%. The important core inflation rate - i.e. adjusted for energy and food prices - is still above 4%. We are still a long way from our 2% target, but the direction is right. Monetary policy will continue to be firm about really getting inflation to 2%.’

‘We have decided to make new decisions from meeting to meeting, based on new data. And that is certainly the right approach in the current situation, which is characterized by a lot of uncertainty.’

31 October 2023

‘Last week we left interest rates unchanged for the first time since July 2022. Given the current inflation outlook and the tightening of monetary policy that has already been achieved, I believe this is correct. Our tight monetary policy is working, but we must not let up too soon. Rather, the key interest rates will have to remain at a sufficiently high level for a sufficiently long time. It is not yet possible to say whether interest rates have already reached their peak: we remain strictly dependent on data. There are several upside risks to inflation. Geopolitical tensions in the Middle East could drive up energy prices and make the medium-term outlook more uncertain. Our monetary policy stance must ensure that inflation returns to 2%. Inflation has proven stubborn and has not yet been defeated. The people of the euro area rightly expect us to do our job and ensure price stability. That is my top priority.’

27 October 2023

‘Inflation is still way off our target rate of 2%. But our tight monetary policy is yielding results. We on the ECB Governing Council are therefore staying our course and have left interest rates unchanged. We will continue to take decisions on the use of our monetary policy instruments on a meeting-by-meeting basis.’


François Villeroy de Galhau (Banque de France)
09 November 2023

‘I believe we’re really going on a good direction with inflation. … There can be slight volatilities, but regarding the long-term, the tendency is very clearly falling. There are other elements that could surprise, such as petrol prices, because of the conflict in the Middle East.’

‘It’s too early to talk about cuts, but rate cuts will come when everyone is convinced that inflation will come back to 2%.’

31 October 2023

‘The provisional figures for October show a marked deceleration in inflation in France, as in the Eurozone: at 2.9%, it has been considerably reduced over the last year (10.6% in October 2022). Energy prices are certainly contributing to this, but core inflation (excluding energy and food) is also continuing to fall: at 4.2% in the Eurozone and even lower in France, it has clearly passed its spring peak. This is a strong sign of the effectiveness of monetary policy. At the same time, the French economy, although slowing, showed a degree of resilience in the third quarter, with clear growth in consumption and investment. This state of the economy fully justifies the halt to the rate hike sequence decided by the Governing Council last Thursday. Our monetary policy must now be guided by confidence and patience: confidence that we are making firm progress towards bringing inflation down to 2% by 2025; and patience that interest rates will remain at their current level for as long as is necessary for them to be fully effective.’


Fabio Panetta (Banca d’Italia)


Pablo Hernández de Cos (Banco de España)
05 November 2023

‘It [the Middle East conflict] adds additional downside risk to euro area economic growth and upside risk to inflation. However, from the perspective of monetary policy, if this risk materializes, the relevant thing will be to analyse its implications for inflation in the medium term, which is the relevant guidance for the ECB. In this sense, it is important to emphasise that this new negative supply shock would be occurring in a very different macroeconomic context than that which prevailed in March 2022 when the war in Ukraine began. … Now, demand in the euro area is very weak, both in the consumption and investment components and affects all sectors of the economy. And the orientation of monetary policy is clearly restrictive, after the accumulated increase of 450bp in interest rates that we have made in recent quarters. The downward effect on economic growth could, therefore, be greater and, in turn, this could reduce the upward impact on inflation in the medium term. Provided, obviously, that the second-round effects on business margins and salaries were limited and that inflation expectations remained anchored in our 2% objective. In this case, the monetary policy reaction should also be different.’

‘…if we keep rates at these levels for long enough, it is very likely that we will be able to achieve our 2% inflation target in that medium-term horizon. But I would like to emphasise that this statement is conditional. We have reached this conclusion on the basis of the information available to us when we made monetary policy decisions. The level of uncertainty regarding the future dynamics of the economy remains high and is subject to geopolitical risks, among other factors, the evolution of which is difficult to anticipate. Additional shocks could occur, and our response to them will depend on their origin and magnitude and their impact on the inflation outlook.’

02 November 2023

‘Overall, therefore, since our September meeting, we have observed:

- A materialisation of downside risks to economic growth in the euro area. Risks for the future remain, moreover, on the downside.

- Similar developments as expected with regard to inflation, with headline and core inflation declining further. Risks to inflation going forward remain balanced.

- A further, stronger than expected, tightening of financial conditions confirms a very strong transmission of our monetary policy. Moreover, a significant part of the pass-through of monetary policy tightening is still outstanding.

On the basis of this assessment, last week the GC of the ECB maintained interest rates and considered that they are at levels that, maintained for a sufficiently long period of time, will contribute substantially to bringing inflation back to its 2% objective.

- The high level of uncertainty requires maintaining the data-dependent approach.

- In any case, policy rates will be set at sufficiently restrictive levels for as long as necessary to achieve our objective.

- For the time being, it is absolutely premature to talk about interest rate cuts.

Geopolitical risks, in particular the possible extension of the war in the Middle East, remain the main driver of economic and inflationary developments in the euro area.

 - Should this risk materialise, it could have a large negative impact on confidence and financial markets and, in particular, lead to a significant increase in energy commodity prices, which would constitute a further negative supply shock.

The monetary policy reaction to a possible materialisation of this new supply shock could be different from the one that emerged as a result of the war in Ukraine, given that, while in the short term it would generate an increase in inflation, from the perspective of medium-term inflation, which is the relevant one for the ECB, its effects could be much smaller, given that:

- Monetary policy now maintains a clearly restrictive stance. As an illustration, the interest rate on the deposit facility stands at 4% compared to -0.5% before the outbreak of the war in Ukraine.

 - Euro area activity is now very weak, compared to the strong rebound after COVID that accompanied the start of the Ukrainian war.

For monetary policy to have this different reaction to the eventual materialisation of such a new negative supply shock, it would be crucial for medium-term inflation expectations to remain anchored at 2% and for second-round effects on wages and inflation to be limited.’

27 October 2023

‘After the last interest rate increase that took place ... last September, the most important thing from the point of view of the communication of the European Central Bank has been that we think that with the information that we have at the moment - and this is very important to underline - interest rates at their current level, if they are maintained for a sufficiently long time, could be sufficient to reach our inflation target... What was relevant at yesterday's meeting was precisely ... to assess the extent to which what had happened in the last few weeks confirmed or did not confirm that assertion. The analysis we made, the assessment we made ... is that it is indeed still valid, and that is why we made the decision this time not to increase interest rates. But let me ... underline as always two things. First, for that statement to be valid, we continue think that interest rates will have to remain at current levels for a sufficiently long time. And secondly, that such a statement depends on economic circumstances. We have suffered a lot of shocks over the last few years, over the last few quarters. There are many risks. The level of uncertainty is still very high, and therefore we have to be cautious. And as we always say, any decision going forward is going to depend precisely on the data.’

‘First of all, on economic growth, what we have seen in recent weeks is very weak growth in the case of the euro area, and we cannot even rule out a recession, which in principle could be a mild recession, a recession of a technical nature. And furthermore, we still think that the risks are on the downside ... and in particular, because of the argument that I underlined: we have a new conflict, in this case in the Middle East, which will certainly have negative consequences on confidence, we will see. If it were to spread, it could also have very negative effects on financial markets and also on energy markets. On inflation, indeed, what we have seen is a significant reduction in both headline and core inflation. This is good news. Moreover, the forecast errors we have made in recent months have been very small or virtually non-existent, which gives us confidence about the forecasts we have going forward that inflation will indeed progressively decrease towards our 2% target. And then, very importantly ... the transmission of our monetary policy is very strong.’

‘...we do not know at this moment how long it will be necessary to maintain interest rates to achieve this 2% objective. ...The current level of uncertainty is so high that we cannot make those types of [forward guidance] statements. What we do know is that of course it is absolutely premature right now to talk about interest rate cuts, and that we think that interest rates are going to have to remain at this current level for a long enough time to achieve this objective of 2%.’


Klaas Knot (De Nederlandsche Bank)
09 November 2023

‘Today, we see risks of the opposite, with a still accommodative fiscal policy counteracting the efforts of a more restrictive monetary policy.’

‘Sound public finances are another prerequisite for the stability of a monetary union. Threats to fiscal sustainability could weaken the central bank’s ability to maintain price stability, could spill over from one member state to others, and could trigger financial stability risks. Today, in some member states, we observe very high government debt-to-GDP ratios, which naturally fuel concerns about fiscal sustainability.’

‘The role of budget constraints to discipline fiscal policy is particularly relevant today, as inflation is still too high and government spending keeps adding to inflationary pressures. If we do not act, the policy mix may become more unbalanced, making it more difficult to ensure price and macroeconomic stability.’

02 November 2023

‘Restrictive policies will likely remain needed for some time to come to get inflation back down to target.  Personally, and conditional on incoming data confirming the latest projections from September, I see the current level of our policy rates as a good ‘cruising altitude’ where they can remain for some time.’

‘the effects of the policy tightening on the real economy - think about investment, GDP, unemployment – will only be felt in about one year’s time. Hence, we should be a little patient and not raise rates too much to prevent choking off the economy. Second, even though inflation numbers have started to decrease, the risk still remains that high inflation may become entrenched if second round effects persist or inflation expectations de-anchor. Therefore, we need the incoming data to continue to confirm our projections – which have not been the best in an environment of major shocks – if we are to have confidence in them.’

‘To date, this ‘quantitative tightening’ has been smooth and well-absorbed by financial markets. This is similar to what we see from our international peers, who – in fact – are reducing their balance sheet at a relatively faster pace. That brings me to the challenge. While, clearly, the current balance sheet has to shrink, our future balance sheet size may need to be larger than it was before the Global Financial crisis. The reason is that structural changes in financial markets, including a higher demand for liquidity, will call for a larger central bank reserves in the future. In my view, refinancing operations represent the most efficient tool to provide such a level of reserves down the road.’


Pierre Wunsch (Belgian National Bank)
08 November 2023

‘Getting to 2% in 2025 is still a long way, so let’s not get excited. Of course, if we would have bad news on the upside, we would have to do more, but that has become less likely again, unless we have a shock on the energy front.’

Growth risks are ‘tilted to the downside’, inflation risks ‘toward higher inflation’.

The Eurozone is ‘entering some weak form of stagflation — we’re probably in it right now.’


Mārtiņš Kazāks (Latvijas Banka)
08 November 2023

‘This decision right now to keep rates at current levels is to be really convinced inflation won’t rise again.’

‘We have to be convinced that inflation has been beaten — then we can step by step lower rates.’

‘One thing is to push inflation lower; another is to be convinced inflation won’t rise again. That’s why there’s this cautiousness.’

08 November 2023

‘Of course, it’s not over yet. That’s the reason why we are holding onto the rates at the current level, given the uncertainty … We cannot exclude the possibility that further rate increases might be necessary. But we simply don’t know … so we will do the best we can … we will not hold the rates at very high levels a minute longer than necessary.’

08 November 2023

‘We are committed to our target of 2% and we shall deliver it. Our current outlook forecasts that we will achieve it in the second half of 2025.’

‘But if fiscal and structural policies are at odds with monetary policy, it will take longer to achieve our price stability target and the path to it may be more volatile, neither of which is good for businesses and households.’

31 October 2023

Cutting rates would take a ‘very dramatic turnaround’ of the economy.

‘There’s no need to discuss rate cuts.’

A rate cut in 1H 2024 ‘would be, in my view, inconsistent with the current macro outlook — but uncertainty, of course, remains high.’

‘Yes, we’ve seen a sharp decrease in inflation rates, but they’re still way above 2%. The risks of inflation becoming persistent at higher levels than we’ve seen in the past, but not at 2%, are of course still there.’

‘The door should be always open if we see it necessary for rates to go up. We’ll decide it from meeting to meeting.’


Tuomas Välimäki (Bank of Finland)


Madis Müller (Eesti Pank)
27 October 2023

‘We found that, according to current knowledge, interest rates are already high enough to allow the price increase in the euro area to slow down permanently to the 2% target set by the central bank within a reasonable period of time. The question now is primarily how long it is necessary to keep interest rates so high. The answer will be given by the economic development of the coming months and quarters. We are pleased to note that the price increase is clearly on a downward trend in the euro area. … However, the rate of price increase is still too fast. One of the important reasons for this is the relatively fast wage growth in the euro area, close to 5%. It is quite understandable that people expect a wage increase to restore as much as possible the purchasing power damaged by rapid inflation. For this, favourable conditions are created by the labour market, which is still in good condition, where the level of unemployment has remained at a record low for the euro area. … Although the euro area is currently showing the first signs of a slowdown in wage growth, sustained wage growth over a longer period of time may mean that general price growth will take longer to slow down. When talking about price increases, we can't ignore the once again high energy prices due to geopolitical tensions. The conflict in the Middle East and its possible expansion is one of the most important risks that, through rising oil and gas prices, can prevent a slowdown in price growth in the euro area. The latest news concerning the situation of the European economy and the near-term outlook is rather more pessimistic. Industrial production will probably continue to decline in October, credit growth has slowed down, and investments in both housing and companies to expand their business activities are quite modest. While industrial companies in particular have been in a relatively more difficult situation over the past year, in recent months companies in the service sector have also become more pessimistic, especially on the business services side. So far, companies offering tourism and travel services have fared better. ... In general, however, the decrease in loan volumes and investments as well as the relative weakening of general economic activity is to be expected, considering the sharp rise in interest rates over the past year. If we evaluate the outlook for the economic recovery of the euro area, on the positive side, the US economy is in a relatively better condition, supporting the export opportunities of European companies. Also, China's economic growth indicator for the last quarter turned out to be better than expected, although problems in the real estate sector there seem to continue. In summary, when describing the economic situation in the euro area, it is more correct to speak of stagnation and sluggish recovery, and not of a deep economic crisis. Getting inflation under control does not necessarily require the central bank to trigger a deep recession with high interest rates. It is still likely that the euro area economy will gradually recover next year. This is supported by the recovery of people's purchasing power, as price increases are expected to be lower than average wage increases.’


Boštjan Vasle (Banka Slovenije)
27 October 2023

‘Economic activity in the euro zone is slowing down, while inflation is gradually decreasing, but it remains above the European Central Bank's target. The latter reinforces market participants' expectations of a longer period of high levels of key central bank interest rates. In these circumstances, the members of the ECB Council have decided to keep the ECB's key interest rates unchanged this time after ten consecutive sessions in which we decided to raise interest rates, totaling 4.5 percentage points. At the same time, we emphasise that our further steps will continue to depend on the current situation. The latest data indicate that the cooling of economic activity in the euro area continued in the third quarter as well. With a decline in new orders, a reduction in inventories and stricter financing conditions, the situation remains the most challenging in manufacturing activities, while survey data have also been pointing to a slowdown in services for several months. The labour market remains resilient to the slowdown in economic activity, with the unemployment rate hitting a new low of 6.4% in August. Inflation in the euro area decreased to 4.3% in September, reflecting lower growth in food and energy prices and the moderation of core inflation. Despite this, the risks for a possible higher price increase remain significant and arise mainly from the high tightness of the labour market and the possible effects of geopolitical instability on the movement of energy prices. Previous increases in key interest rates continue to be intensively transmitted to financing conditions. The outbreak of war in the Middle East has so far had a limited impact on financial markets. The risks of worsening geopolitical conditions were most reflected in higher prices of energy products. Movements in the remaining segments of the financial markets were mainly shaped by market participants' expectations that in order to achieve the inflation target, it will be necessary to maintain key interest rates at high levels for a longer period of time. As a result, the required yields on government bonds at the global level have risen more visibly, especially for longer maturities. The associated higher borrowing costs had an impact on the increase in risk premiums, which was reflected in the drop in share prices and higher credit premiums in riskier financial segments. On the basis of this data, the members of the ECB Council have decided to keep the ECB's key interest rates unchanged this time after ten consecutive sessions in which we decided to raise interest rates, totaling 4.5 percentage points. We estimate that the latter have reached levels which, if maintained long enough, will significantly contribute to the timely return of inflation to the target level. Our further steps will continue to depend on the current situation, that is, on economic and financial data, the movement of core inflation and the effectiveness of our measures. Accordingly, our decisions on a meeting-by-meeting basis will ensure that interest rate levels are sufficiently restrictive for as long as necessary to return inflation to our 2% target in a timely manner.’


Yannis Stournaras (Bank of Greece)
07 November 2023

‘Inflation would be a big risk if it went up. But now we think we have tightened monetary policy sufficiently, the economy is weak in Europe. This year we will probably close at 0.5%, maybe 0%, it is not certain, there is a very large source of uncertainty still from the unjustified war, the invasion of Russia in Ukraine and the tragic conflict that we now have in the Middle East. So, we have very big geopolitical uncertainties. So, we decided that the best thing for us, for the European Central Bank, is to wait and see.’

‘Of course it is my personal opinion, I repeat, it has not been discussed at the European Central Bank, but I think that if … if in the middle of next year, around August, inflation falls below 3% … on a permanent basis and we have a way of understanding what is permanent, look at what we say, base inflation, core inflation, look at expectations, look mainly at the labour market, let's see if businesses are finally starting to absorb the increases. Because we've had big increases, we've had increases in business profit rates. So, if all this is normalised, then by the middle of next year, I think we can start to think of a small reduction in the base rate.’

31 October 2023

‘So far, the path of disinflation meets our expectations. But the economy is much weaker than we thought in September. This is the main difference compared to the last meeting. Financial conditions are also slightly tighter than expected.’

The role played in the discussion at the last Council meeting by the violence in the Middle East was ‘[a]n important one. The level of uncertainty in the supply side is very high. It added up to the decision of becoming more cautious. … We have seen a reaction in financial markets and the energy market, but not a dramatic one. The problem is that we don’t know what’s going to happen, how many countries will be involved. I have seen and experienced the consequences of many crises in my life to know: At this moment, the markets are just waiting. They pause. For us, the Governing Council of the ECB, this is a source of high uncertainty. … Of course. We know that a major Middle East crisis with involvement of oil producing countries will have a large impact on energy markets, which might be inflationary in the short term. But there is the risk of stagnation in the medium term, not to mention refugee influxes to Europe. That is a really dangerous situation.’

‘I can tell you my personal view: Yes, we have [reached the terminal rate]. I don’t know whether it’s a majority view in the Governing Council of the ECB, because we have not discussed this issue yet. This may be discussed in subsequent meetings in 2024. … With the additional uncertainty in the Middle East, it is even more difficult to say [when rates can go down]. Personally, again, I would start thinking about reducing interest rates, if inflation in the middle of 2024 passed the threshold of the 3% to the south in a permanent, sustainable way.’

‘If I am not mistaken, the pace of reduction of the Eurosystem balance sheet is the strongest among the major central banks in the world. And it continues in this direction, through TLTRO and APP redemptions. Why should we increase it even more given that economic uncertainty worldwide has increased?’

31 October 2023

‘While significant progress is being made, the battle to fight inflation has not yet been won. At the same time, for as long as monetary policy tightening to stabilise prices lasts, the fiscal stance should be restrictive so as not to create excess demand that could feed back into current inflationary pressures.’


Peter Kažimír (National Bank of Slovakia)
30 October 2023

‘A large chunk of our past decisions still needs to transpire into the real economy. All those voices coining this as the end of the cycle should hold their horses. It’s too soon to declare victory and say the job’s done. As much as I would like this to be the end of the path, upside inflation risks have yet to dissipate entirely. We must stay vigilant. Long story short, additional tightening could come, if incoming data force us to take such a step. Therefore, I will eagerly await the December update of our inflation forecast to get a clearer picture, confirmation, that the decline in inflation is sustained. I hope that renewed upside inflation risks from the escalating tragic conflict in the Middle East will not materialise. The Eurozone’s economy, already exposed to a combination of growth-slowing factors, struggles to regain momentum. December forecasts are one of two key milestones needed to pass. March is the latter. By then, it should have become clearer how wage negotiations for the whole year turned out and whether the risks of a spiral of high prices and high wages were off the table. Only then will we be able to say the tightening cycle is completed and move on to the subsequent – monitoring – phase. As I have said several times, we will have to stay at the peak for the next few quarters. Bets on rate cuts happening already in the first half of next year are entirely misplaced. The December meeting is going to be a very interesting one.’


Mário Centeno (Banco de Portugal)
03 November 2023

Recent October inflation figures for Portugal and for the euro area prove the convergence towards the medium-term objective of 2%, which is good news for the conduct of monetary policy.’

‘The slowdown in external production and more restrictive financing conditions are affecting and conditioning consumption and investment decisions and obviously have an impact on growth.’


Gabriel Makhlouf (Central Bank of Ireland)
08 November 2023

‘The domestic economy has continued to expand, albeit at a slower pace, as monetary policy is taking hold, domestically and globally. Early signals of the impact of inflation and monetary tightening on borrower resilience are becoming visible among Tracker mortgages, personal loans and certain corporate lending segments. We are seeing vulnerabilities in Commercial Real Estate (CRE), but the labour market remains robust and the broad macro picture shows there is resilience in the economy and financial system. Having said that there is huge uncertainty as to what lies ahead. A large part of monetary tightening has yet to be passed through to the financial system and to the economy; and while some risks are fading, new risks are emerging.’

31 October 2023

‘[Last week], we decided to keep the three key ECB interest rates unchanged.  The incoming information broadly confirmed our previous assessment of the medium-term inflation outlook with inflation still expected to stay too high for too long, and domestic price pressures remaining strong. Our past rate increases continue to be transmitted forcefully into financing conditions and are increasingly dampening demand, thereby helping to push down inflation. Our assessment remains that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our 2% medium term target.’

‘To repeat, the central bank’s balance sheet is a policy tool.  Our task is not to make profits but to ensure price stability.  We have always known that, at some point, monetary policy actions to achieve price stability could result in losses on our balance sheet. We identified these risks a number of years ago and have been taking prudent actions to prepare for such an eventuality.’

‘I expect us to report losses in the years ahead as a result of the monetary policy measures taken in the pursuit of price stability over the past decade, coupled with the current level of interest rates to return inflation to our target.  But that is one of the consequences of having our balance sheet as a policy tool and our overriding commitment to deliver price stability.’


Gediminas Šimkus (Bank of Lithuania)
30 October 2023

‘In my view, if there’s no new staggering data, current restrictive levels are sufficient.’

‘There is and there was no need to raise rates at this point. Will we need this in the future? We still have to wait and see. I’m hopeful this won’t be needed.’

‘Data-based decisions is a fundamental principle for each meeting.’

‘Uncertainty and inflationary pressures remain high.’

‘Inflation is still high, too high. Any talk about cuts is premature. We need strategic patience to keep rates at restrictive levels. I’d be highly surprised to see a rate cut in the first half. I don’t think so.’


Robert Holzmann (Austrian National Bank)
06 November 2023

‘There are discussions which take formally place, and then you had many opportunities [in Athens] to … talk in the background, to have over many lunches and dinners, bus rides, etc. an opportunity to talk about it [QT]. And my optimistic understanding is that now, the problem is well defined, that there needs to be a solution. What I proposed is one solution. There may be others out there, I don't know, I'm looking forward to the much more senior people with experience about other solutions. But what we have, I think it's already a practical one, it's not something which cannot be done, it can be done, maybe with some kind of arrangement. But for this, we need to have first also the discussion about our operational framework, which we have not fully started yet. And this will take some time. Time, which … will reach over into the next year. But also it did allow us to have a very profound and sound discussion what this means for the operational framework and how we can keep our balance sheet clean over the long run. … No, nothing this year, nothing for this year [on QT]. And the thing is that … we cannot have the discussion separated from our operational framework.’

‘… the months before [September’s lower-than-expected inflation] we had a surprise in the other direction. That's normal. If inflation comes down, it depends from month to month what kind of base effect you have which drops in, which drops out there. And so, one month’s data doesn't make a new development. But what it is, and I think we are all very careful in that, that's the last mile, as Isabel Schnabel puts it in this paper, is a difficult one. And when you read in details through her paper, it shows … how many aspects of monetary policy and the … underlying development may bring inflation back again. And I did it yesterday again, because I had a little bit of time, and I found out how … really complex the situation is. And on many of the things we have a broad understanding what it may mean, but we have still an imperfect understanding of the data which are related to that. And we all also … heard about the paper of the IMF a month ago ... If in 90% of the cases … the problems emerged happened because you eased early, I think it's an early warning. So, I definitely belong to those who think that we should be very careful, that we should we stand ready, again, to hike if needed, and certainly don't declare victory too early on. This may not happen this time. It's not excluded, but the probability is pretty small. … we need to stay vigilant.’

‘And there are many opportunities why [another rate hike might be needed], we saw still the ongoing conflict in Israel. It can easily lead to a further increase in energy prices. We had increased the energy prices compared to the projection by 25% over the last few weeks. … We still … don't have any fallout … on food. We have El Niño and El Niño didn't have an effective yet. … So, there, the data shows quite clearly that this can have an effect of 1% of increase of temperatures with El Niño, which is the lower area, not the upper one, could mean after 12 months 8% inflation in food. And given what this means you may have another, say, 1.5% coming in on the inflation rate there. So, there are many disturbances out there, which may still be there, which we should not underestimate.’


Boris Vujčić (Croatian National Bank)
09 November 2023

‘If our current projections materialize, then we will have a soft landing with a low sacrifice ratio, meaning without a recession and without a significant increase in unemployment. We cannot be certain that it will stay that way until we reach our goal, but in my view the soft landing is still a central scenario.’

‘First, we have to see whether such a shock [of higher energy prices due to the Middle East conflict] will happen or not. If it does, what is the nature of that shock and what is the extent of the shock? And then we will try to estimate the possible impact on price developments and act accordingly.’

[I]t’s too early to think about rate cuts … However, we have to stand ready either for a possibility of rate increases or rate cuts, depending on incoming data in 2024.’

04 November 2023

‘We expect that we are in sufficiently restrictive territory as far as interest rates are concerned and that inflation can continue to decrease at this level.’

‘We must be aware that such a risk exists, that we have another shock on the supply side, perhaps of energy sources, if such a complication of the situation occurs. However, in our projection, where there is no such shock, we expect a gradual further decline in the inflation rate in the coming months and next year.’

29 October 2023

‘We have finished with the process of raising interest rates for now. At this moment we see that inflation is falling, we have a disinflation process. And after we conducted a series of measures to dampen lending, it has fallen.’


Gaston Reinesch (Central Bank of Luxembourg)


Constantinos Herodotou (Central Bank of Cyprus)


Edward Scicluna (Central Bank of Malta)