They Said It - Recent Comments of ECB Governing Council Members

11 March 2024

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 7 March, but earlier comments can still be seen in versions up to that of 4 March.



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)


Rehn (Bank of Finland)


Vasle (Banka Slovenije)


Villeroy (Banque de France)


Vujčić (Croatian National Bank)


Wunsch (National Bank of Belgium)


Christine Lagarde (ECB)
07 March 2024

‘On inflation, first of all, I would observe that we are on this disinflationary process, and we are making progress. We came from 2.9% in December, 2.8% in January, 2.6% in February. There is a definite decline which is under way, and we are making good progress towards our inflation target. And we are more confident as a result. But we are not sufficiently confident, and we clearly need more evidence, more data. We know that this data will come in the next few months. We will know a little more in April, but we will know a lot more in June. So, this is what we have determined during our discussion this morning. And as usual, we have proceeded with a review of the three criteria, which you know is the inflation outlook which, as you will have noted in the monetary policy statement, has been slightly revised, a bit more for 2024 for headline [inflation], but slightly, both for headline and core [inflation] in the next two years, 2025 and 2026. But we feel more confident about those projections. The second element that we look at, as you know, is the underlying inflation and on that front as well we are seeing a narrowing of the range between the various measures that we use. We are also seeing a general moderation, with one exception. I'll come back to that if you want. We have looked carefully at the strength of monetary policy transmission. Those are the three components that we are very keen to check carefully and to monitor meeting-by-meeting to see what information it delivers. And it’s clearly a positive signal, but certainly not enough of a series of signals to make us confident enough yet at this point in time.’

‘There was general broad agreement about the fact that we will get a lot more data and a lot more information in June. That's a certainty. There was also a very broad agreement around the fact that we will not change our views on one single data [point]. And what we are seeing in the data at the moment is indicating certain movements that are directionally good, but it is not strong enough and durable enough, for the moment, to give us sufficient confidence. So that was a generally accepted sentiment around the room and the decision that we made was a unanimous decision, by the way. You are correct that while we continue to look at the three components of the reaction function; the inflation outlook, the underlying inflation and the strength of monetary policy, there are two components that we are particularly vigilant about. And those two components are the wages evolution as well as the profits evolution. Unit labour costs, unit profits are two items that we will be particularly attentive to and will continue to be attentive to. I mentioned that in the underlying inflation measurements there is one which is not moving in the same direction as the others. The others are generally declining and the range between the various instruments is narrowing as well. But there is one that is not declining and that is domestic inflation. Domestic inflation is largely informed by services, which itself is for most services labour-intensive, and therefore very sensitive to wage evolution. So those are the two components that we will particularly zero in and try to be laser focused on to see whether there is confirmation or not of this beginning of moderation that we are seeing on the wage front, and confirmation of what has been observed on the profits, as to whether or not profits absorb and act as a buffer for the wage increases. We will have the Q4 numbers for CPE, for compensation per employee, tomorrow. Our assessment for the moment is: [the CPE was] declining, relative to the third quarter. I think it's a conservative assessment given the various other elements that we try to look at. We look at some backward-looking elements, but we also try to be as forward-looking as we can by really following very carefully all the new agreements that are signed and how terms and conditions will apply going forward.’

‘But we don't only look at core. We look at other measurements of underlying inflation to try to remove the noise from the signals and try to really measure each and every time what is going to be the best indicator to give us the measurements of what is to come. I wish everything was closer to our target. We're not there yet. We are not there. Even on headline inflation, we are still projecting 2.3%, which is a revision from what we had before. But we're still at 2.3% in 2024 and we are at 2% in 2025. Core inflation is at 2.6% in 2024 and then moving to 2.1% in 2025 and finally reaching 2% in 2026. I am not saying here that we will wait until we are at 2% and that we see 2% to take a decision. This is not what I'm saying here. But in terms of projections, both headline and core, this is what we are seeing.’

‘I've tried in the past to refrain from passing judgement and commenting specifically on market expectations. I just note that it seems to be converging better, but everyone has to do their job.’

‘But I would not commit to any kind of pace, rhythm, magnitude, because we will continue to be data dependent. We will continue to observe how the economy evolves, how the labour market moves, how wages moderate, and the impact of tightening on the financing of the economy. All these factors will be taken into account to determine future moves.’

‘So first of all, we have not discussed rate cuts at this meeting. What we have done is that we have just begun discussing the dialling back of our restrictive stance. But of course we need a lot more information coming in in the next few months to be sufficiently confident. Your second question related to the degree of information. Well, when you look at what will be published and what data we will have, in terms of activity, wages and profits, we will have a little in April, and we will have a lot more of that for our June meeting. It matters, because we are data dependent, and we are adamant that we will be data dependent.’

‘Once the data confirms that we are sufficiently confident to reach our 2% target in the medium term and make sure that it will be sustainable, we will act. That's what I can tell you. By the way, I didn’t say that there was no rush. I said that we did not discuss cuts for this meeting, but we are just beginning to discuss the dialling back of our restrictive stance, provided that we have enough and certainly more information to be sufficiently confident.’


Isabel Schnabel (ECB)


Philip Lane (ECB)
11 March 2024

‘Looking to the next phase of monetary policy, ensuring the convergence of inflation to the target on a sustainable basis will determine the future path of policy rates.’


Luis de Guindos (ECB)


Piero Cipollone (ECB)


Frank Elderson (ECB)


Joachim Nagel (Bundesbank)
08 March 2024

‘And what makes me very confident is that market participants, i.e. more than 80% ... assume that if there are interest rate cuts, it could happen in June of this year at the earliest. So monetary policy is understood in the market. This is also important in order to provide confidence there, to reduce volatility on the markets and so that monetary policy can have its full effect here, too.’

‘That [a first rate cut in June] will depend on the data, that's for sure. We will go from meeting to meeting. Let me put it this way, the probability is increasing that we could potentially see a rate cut before the summer break. But again, that will clearly depend on the data, but the outlook has brightened in this regard, and I would like to note that too.’


François Villeroy de Galhau (Banque de France)
08 March 2024

‘Today there is a broad consensus that the risks are balanced. We must guard against two pitfalls, that of haste, lowering rates too early and risking missing our inflation target of 2% and there is the pitfall of remaining tense, that is to act too late and weigh too much on activity.’

‘I would first like to remind you that the disease has been cured, that is to say that the monetary policy has been effective, inflation in the Eurozone was above 10% at the end of 2022, the latest figure is 2.6%. We are now increasingly confident that we will bring inflation down to 2% by next year. There is therefore a broad consensus on an upcoming rate cut.’

‘So there is a broad consensus that rates will be cut soon, or to put it another way, there is a broad consensus that gradualism is preferable to "wait-and-see" policy, which would mean waiting too long. I believe that gradualism is the best way to insure against these two risks, which are now symmetrical: haste, but also the risk posed by remaining tense.’

‘It seems very likely to me that there will be a first rate cut in the spring, I remind you that in Europe, as elsewhere, spring is a season that lasts from April until June 21.’


Fabio Panetta (Banca d’Italia)


Pablo Hernández de Cos (Banco de España)


Klaas Knot (De Nederlandsche Bank)


Pierre Wunsch (Belgian National Bank)


Mārtiņš Kazāks (Latvijas Banka)
08 March 2024

‘The first cut will be important, because that will show that we’ve changed the path. But in my view, it does not mean that we’re forced or obliged to cut each and every meeting. The optionality is always there. We don’t put anything on autopilot.’

‘Wage growth seems to be easing somewhat. We see some leading indicators also pointing to the same direction.’

‘Those risks of being too early and too late, I would say they are increasingly balanced.’


Olli Rehn (Bank of Finland)
08 March 2024

‘The European economy, which stagnated to almost zero growth last year, is now slowly on its way to recovery, albeit more slowly than many previously estimated. Inflation has slowed towards the 2% symmetrical target, and monetary policy is still doing its job.’

‘An assessment of the tightness of the labour market is important when assessing future inflation trends and the need to change the measurement of monetary policy. The rapid rate of increase in wages maintains service inflation, which is currently the most important factor accelerating inflation. The faster-than-expected slowdown of inflation in the euro area is also good news because, with the strengthening of the real purchasing power of wage earners, the need to compensate for inflation in the form of higher salary increases decreases. Salary development is associated with significant uncertainty, which will take time to dissipate.’

‘Communication signalled a change. Before this week's meeting, the ECB Council had not discussed interest rate cuts. Yesterday, however, we started a discussion about how we start to take our foot off the brake of monetary policy, when the rate of inflation has turned out to be slower than predicted. In the language of economists: it is therefore time to discuss how we adjust the monetary policy to a lower level, i.e. reduce its restrictive dimensions. My own assessment is that based on the forecast that has now been received, the risks of premature interest rate cuts in terms of inflation control have substantially decreased. This is also affected by the lowering of the growth forecast. We will come back to the matter in the upcoming April and June meetings based on the latest information. There have also been voices in the discussion that the ECB could not lower interest rates before the Fed, the US central bank. Rumours about this are greatly exaggerated: the ECB is not the Fed's "13th Federal District", i.e. one regional central bank. The growth and inflation trends in Europe and the United States are currently so different that different paces in monetary policy are also justified. The ECB conducts an active monetary policy, and in the Council we make monetary policy decisions specifically from European points of view, next in April and June.’


Madis Müller (Eesti Pank)
08 March 2024

‘…the Governing Council of the European Central Bank decided to leave the interest rates unchanged, because we need a firmer confirmation that the trend of falling prices will continue before starting with interest rate cuts. It is possible that this sufficient feeling of confidence will already arise based on the economic indicators of the coming months.’

‘In the last quarter of 2023, the pace of wage growth probably slowed down to less than 5%, but in the future, wage negotiations with trade unions that affect the labor market of major European countries, which are still ongoing, are important. The wage increase will help to improve the purchasing power that suffered during the period of rapid price increase, but unfortunately it is also clear that a wage increase permanently close to 5% would make it more difficult for the euro area inflation to slow down further.’

‘In a nutshell, the euro area economy is still stagnating, but there are increasing signs of increased economic activity and a return to optimism.’


Boštjan Vasle (Banka Slovenije)
08 March 2024

‘We estimate that the current level of interest rates, 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, i.e. on economic and financial data, the movement of core inflation and the effectiveness of our measures. … Inflation will continue to decrease during the forecast period, and after external price pressures have subsided, the pace of future inflation reduction will largely depend on the movement of core inflation and labour cost growth. Inflation will average 2.3% this year, and in 2025 and 2026, if the disinflationary effects of monetary policy persist, it will further decrease to 2.0% and 1.9%. The continued decline in inflation, which has somewhat slowed down in recent months, maintains market participants' expectations for a cut in key ECB interest rates later this year, expecting the reduction to be more gradual and cautious than initially anticipated.’

‘We estimate that the current level of interest rates, 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, i.e. on economic and financial data, the movement of core inflation and the effectiveness of our measures. Our decisions each time will ensure that interest rate levels are sufficiently restrictive for as long as it takes for inflation to return to our 2% target in a timely manner.’


Yannis Stournaras (Bank of Greece)
10 March 2024

‘Although interest rates have remained stable since September 2023, past rate hikes will continue to be transmitted to financing conditions and the real economy to some extent well into this year as monetary policy operates with time lags. However, we do not expect any significant negative effects on the economy. According to the latest forecast, we expect growth to pick up from mid-2024 onwards. We can now say with great certainty that monetary policy measures have managed to tame inflation without significant side-effects on the real economy and financial stability.’

‘In order to start the cycle of easing ECB policy rates, we need to be confident in the ECB's Governing Council that inflation is steadily converging towards its medium-term objective of 2%. Indeed, significant progress has been made in slowing inflation in the euro area from its historically high level in October 2022 to date. Based on the latest forecasts, the slowdown in inflation is expected to continue in the period ahead. Specifically, it is forecast to reach 2% in the second half of 2025 and remain in line with the target until the end of 2026. The weakening of inflationary pressures is also confirmed by underlying inflation measures. In particular, core inflation in the euro area, measured by the consumer price index, excluding the energy and food sectors, continues to decelerate and is forecast to approach close to 2% next year. At the same time, the expected gradual weakening of wage growth, tight profit margins and productivity developments are expected to dampen the inflationary impact of higher labour costs. Moreover, the hitherto restrictive monetary policy will continue to be transmitted over the period ahead, both to financing conditions, affecting borrowing rates and credit growth, and to the real economy, further dampening demand and price growth. However, uncertainty about the outlook for inflation and economic activity remains elevated, also due to global developments and geopolitical shocks. I believe that, on the basis of economic data that will become available during the second quarter of the year, we will approach the point at which we can reduce policy rates without jeopardising the progress towards price stability achieved so far.’


Peter Kažimír (National Bank of Slovakia)
11 March 2024

‘Inflation is coming down, and we’re progressing well towards our target. That’s enhancing confidence, which is gradually building up. But we’re not there yet. The slowdown in inflation remains fragile. We can’t take it for granted. Upside inflation risks are alive and kicking. Wage pressures show signs of moderation, but remain far too high and can prove more inflationary if productivity growth does not start picking up. Gas prices have fallen to lows we have seen a long time ago, but developments could easily reverse. The green transition will affect the inflation path in the medium term in ways we do not currently account for properly. Let me add one important element: looser fiscal policy in Europe. The outlook here looks uncertain and could carry upside inflationary risk. We need to stay cautious and wait for more hard evidence where we can get it. Wait for and analyse additional data, the additional confidence boost. Important pieces of the puzzle will arrive in the next couple of months. We will learn a bit more in April, but only in June, with new forecast at hand, will the level of confidence reach the threshold. This doesn’t mean we won’t discuss how to dial back our restrictive policy stance in the meantime. On the contrary, we will use the weeks ahead to do just that. We will investigate how to design a good easing strategy. How to proceed to safeguard inflation’s return to the target while helping the economy rebound in an uncertain global environment. As for the exit strategy, I prefer a smooth and steady cycle of policy easing. For that, we have to be confident about the first step. Like descending from the peak’s summit to the base camp. The current picture clearly favours staying calm for the coming weeks and delivering the first-rate cut in summer. A decision to cut rates now is still a premature reduction, which would be at risk of pausing or even reversing should some developments not fall into place. That could dent our credibility. Ultimately, the risk of undershooting our target is still significantly smaller than the risk of acting prematurely.’


Mário Centeno (Banco de Portugal)


Gabriel Makhlouf (Central Bank of Ireland)
09 March 2024

‘When we get to the point of feeling, actually, you know, we’re confident enough about meeting our target, then we’ll recalibrate the stance and reduce our policy rates. But I expect the stance to remain restrictive for some time – but just not as restrictive.’

‘We have greater confidence that we are on track, but we haven’t got sufficient confidence, or certainty yesterday we hadn’t got to the point where we have sufficient confidence to decide that out monetary policy stance needs to change.’

‘I think that gradual change in the stance is the best way of adjusting and communicating to markets what we’re doing, rather than a sudden decision that recalibrates us in that way. I think that [large individual cuts] is probably unlikely, simply because the data is never that definitive.’

‘It’s not a mechanistic thing – the forecast said this, therefore, we need to do X.’

‘The forecasts are what they are. Some people believe in them much more strongly than I do. I always think that there is so much judgement you have to exercise, because the tendency of forecasts is that they tend to use backward-looking information, and there’s a lot of judgement involved in the forward look.’


Gediminas Šimkus (Bank of Lithuania)
08 March 2024

‘June is the possible month for a rate cut.’

‘I can’t rule out a possibility of a cut in April but the likelihood is low.’

‘We’re not in a rush. I don’t see why the cuts should be larger than 25bp or why they couldn’t coincide with forecast releases.’


Robert Holzmann (Austrian National Bank)
08 March 2024

‘One of the decisions yesterday was no change, but a change may be in preparation.’


Boris Vujčić (Croatian National Bank)


Gaston Reinesch (Central Bank of Luxembourg)


Constantinos Herodotou (Central Bank of Cyprus)


Edward Scicluna (Central Bank of Malta)