ECB’s Vasle: ‘Absolutely Premature’ to Expect Rate Cuts Soon

17 January 2024

By David Barwick – VIENNA (Econostream) – European Central Bank Governing Council member Boštjan Vasle on Wednesday roundly rejected expectations of near-term easing of ECB monetary policy.

Speaking at Euromoney’s Central and Eastern European Forum, Vasle, who heads the Bank of Slovenia, acknowledged that it was ‘clear that the disinflation process is well underway’, but warned that ‘inflation dynamics are still very much determined’ by one-off and temporary factors.

‘What we are expecting for the first half of this year, there might be some additional surprises, there might be some volatility … and that’s why we are very, very careful with what we are expecting with regard to our main policy instruments, especially interest rates’, he said.

Policymakers needed ‘more certainty about the data’ and to be ‘more sure that inflation will really cool down smoothly’, he said.

‘And that is why my expectations are significantly different to those prevailing in the market’, he said, with respect to both the timing of initial policy easing and the pace this would follow thereafter.

It was ‘absolutely premature’ to anticipate rate cuts while the ECB is ‘still waiting for some crucial data’, he argued. In particular, the ECB needed more clarity about labour markets and fiscal policy, he said.