ECB’s Müller: Must Patiently Await Clearer Signs of Sustainable Disinflation

15 December 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Madis Müller on Friday said that the key now was waiting for evidence confirming the sustainability of the ongoing disinflation process.

In a blog post on the website of the Estonian central bank, which he heads, Müller said that at yesterday’s Governing Council meeting ‘there was no disagreement in the statement that the central bank's interest rates are currently at the right level. There is no reason to consider either an additional increase in interest rates or a reduction in interest rates in the near future.’

Previous monetary tightening was transmitting strongly and had also contributed to the reduction of inflation seen so far, he said.

‘Now, above all, it is necessary to patiently wait before the next decisions for clearer signs that the inflation rate in the euro area will indeed fall permanently to 2% within a reasonable period of time’, he said.

However, it was ‘hard to believe’ that the ECB would become confident of this with the speed expected by financial markets, he continued, noting market expectations of several rate cuts before mid-2024.

Core inflation and average euro area wage growth are not consistent with the ECB’s price stability target, he said.

Still, he said, the danger of expectations disanchoring ‘has now clearly diminished.’