ECB’s de Cos Emphasises Disinflation Progress, Notes ‘Key’ Importance of March Forecast Updates

11 February 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Pablo Hernández de Cos on Sunday declined to give explicit calendar guidance as to when ECB monetary easing might start, but confirmed that disinflation was well underway and observed that the next set of projections would determine how confident policymakers could be about the outlook.

In an interview with Cypriot daily Politis, de Cos, who heads the Banco de España, said that understanding the preconditions for a rate cut was ‘more important than calendar-based guidance’.

‘In this regard, it is important to acknowledge that the disinflationary process in the euro area is now well advanced’ and was ‘expected to continue in the coming quarters’, he said.

Confidence surrounding the ECB’s forecasts had ‘increased notably’, he said. Policy pass-through to financing conditions remained strong and was suppressing demand, while risks to growth pointed down, he said.

The next move, probably a cut, would be determined by data , by inflation prospects, by underlying inflation and by policy transmission, he said.

The March macroeconomic forecast update ‘will be key to assessing, first, whether we can be sufficiently confident that our 2% medium-term target will be achieved, taking into account the associated risks, and second, the rate path that is compatible with reaching our symmetric target’, he said.