ECB’s Müller: Reasonable to Expect No Change at Next Several Governing Council Meetings

26 January 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Madis Müller on Friday said that it made sense to expect the ECB to leave interest rates unchanged at the coming Governing Council meetings.

In a blog post on the website of the Estonian central bank, which he heads, Müller noted that at its monetary policy meeting yesterday, the Governing Council had made no changes to key interest rates.

‘This was probably expected by all those who closely follow the activities of the central bank, and it is reasonable to expect the same from the next several monetary policy sessions’, he said.

Though ‘not surprising’ that speculation about easing has become more intense, ‘as a central banker, I have to admit that it is still too early to talk about the next interest rate decisions in a definite form’, he said. ‘For this, there is simply too little confidence that the upward pressure on prices has eased to a sufficient extent.’

In this context, Müller cited still-high core inflation and wage growth as being ‘not in line with the target set by the central bank’, even if, as he conceded, ‘it is also clear that high interest rates have already cooled down the momentum of the credit market and the economy, which has also weakened the pressure for price increases.’

The euro area’s economy was essentially treading water at present, and when the anticipated upturn would set in remained unclear, he said. Risen PMIs and growing world trade were grounds for optimism, and job markets remained strong, he said.

‘At the same time, the current situation of the euro area economy does not seem too encouraging, if you look at the business volumes of companies or the behaviour and confidence of consumers’, he added.