They Said It - Recent Comments of ECB Governing Council Members

18 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)
14 March 2024

‘The changes to our operational framework do not have any implications for our monetary policy stance, neither for our interest rate policy nor for our monetary policy bond portfolios, which we expect to continue to be run off.’


Philip Lane (ECB)
15 March 2024

‘So what remains is the services inflation, in which again, the amount of decline is a lot weaker than the historical normal. And, again, I don’t think that’s so mysterious. That’s why you are hearing all of us saying there are remaining concerns about services inflation… Also these are more labour-intensive, so wage costs are maybe not so important for big manufacturing firms, but they’re important for many services.’

‘It is our assessment here that oil is going to decline in prices… So that is going to be a source of lower inflation. … Fundamentally, our new forecast is heavily influenced by lower energy prices. Let me emphasise we think energy prices matter for all of the items in the price index because energy is a big input cost to many sectors… So energy prices, when they have really big swings, show up everywhere, and they also show up in the wage data.’

‘Let me highlight that we think after two years of pretty subdued progress to the economy growing only 0.5[%] last year and only 0.6[%] this year, it’s going to be a sizable pick-up in the economy in the coming years, and this is a very important part of the forecast, it’s worth thinking about. How do you move from basically an economy that is barely growing to the economy that is growing, in the European context, quite quickly? And the ingredients are number one, wages now are growing more quickly than inflation, so the ability of households to consume is improving this year. So it’s going to be consumption-driven. With the activation of lower interest rates, investment is expected to recover, not quite yet, but in the next couple of years. ... But this is a forecast, it’s a conjecture, so there is uncertainty here about when we’re going to see this pick-up.’

‘What we have is kind of a mixed labour market. We think it’s cooling down, so again, compared to the start of last year vacancy rates, for example on Indeed, are coming down and firms are no longer as fearful about labour shortages. They were saying in ’22, first half of ’23, “It’s hard to find workers.”’ Now if they find it’s hard to find workers, they’re more likely to raise wages. But these numbers are coming down now, so we do think the labour market is softening in many ways.’

‘So there are pro-inflationary forces in the economy… and the big one is the wage dynamic.’

‘Inflation is affected by wage increases only if firms pass along the wage increase. So economically, under what conditions do firms rather than raise prices say, “We’re just going to accept lower profits.”’? So, the context here is that in 2022 firms made a lot of money, profit rates are heavily higher than normal. So, we think with restrictive monetary policy, firms are able to afford to absorb some of those rise wage increases into their profits. And that’s an important way we reconcile wages growing at 4[%] or 5% and inflation at 2[%]. It doesn’t seem to add up, and the way it adds up is we do think we have a phase now where profits will shrink and will decline in normal terms. Directionally, over the course of last year, the contribution of profits got smaller, and we do think there’s some room to go with that.’

14 March 2024

‘It’s fair to say last week in our March meeting, that was, I think, an important milestone in evidence accumulation. In our March meeting last week we were able to look back and to see that the disinflation process has been ongoing, we continue to make progress, continue to move towards our 2% target. So absolutely a lot of evidence is accumulating. But what’s also fair to say is that the transition from this holding phase – we’ve been on hold since last September after a substantial hiking cycle – is we do have to, I think, take our time to get that right from moving from holding to dialing back restrictions. So, it’s clear that we have a lot of confidence, a little more data will help us to build sufficient confidence in the coming weeks.’

‘So the remain open question, and that’s why if we’re totally convinced, totally confident, the discussion would move a lot more quickly. So the remain open question, and I think what’s true is that at the start of the year, January, February, there are kind of turn of the year dimensions to the data and we need to see that settle down a bit. So again, I think that we’re very good at process to analyse the data to make projections. So, we have a fairly stable view that we are on our way back to 2%, but I think that we have the time to validate that to see some more confirmation, especially in those segments, it’s not so much over core inflation, I think, but in the services component, and we do have some time to see further validation. Because it’s important to get that initial transition away from holding towards dialing back restrictions, to get that right.’

‘We think in quarters from a macro point of view, so I wouldn’t analyse April versus June. I think that Q2 is a time when we will be far enough into 2024 to see more of the wage dynamic, to see more of the price pressures. So, we will learn some more by April, we will learn a lot more by June.’

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)
14 March 2024

‘We are seeing that the slowdown in inflation is more intense than the moderation that is happening in nominal wage growth. This logically has a positive impact from the point of view of the purchasing power and the labour market, and we hope that there will be a boost in consumption along with the stabilization of the world economy, which will be the two drivers of economic recovery and of the increase in activity in the coming months.’

‘We try to be confident that this disinflation process continues, both for general inflation and for underlying inflation. All underlying inflation indicators are relatively low, and we hope to continue accumulating more and more confidence that inflation will converge to our price stability target, which is 2%.’

‘The main risk is the combination of salaries, that are growing at 5%, with very reduced productivity. What this means is that unit labour costs are growing very quickly and these unit labour costs impact one sector especially, that is the service sector.’

‘We are seeing that if these unit labour costs are not partially absorbed by the evolution of profits, then inflationary tension may occur.’

‘We decided to keep interest rates unchanged. Maintaining interest rates unchanged because we fundamentally want to accumulate information on the evolution of the factors mentioned before, the evolution of the labor market, the evolution of salaries, the evolution of productivity, etc. And we are convinced that by June we will have enough information. We will have a higher level of information, among other factors, because there are many collective agreements that are signed in the first months of each year, and obviously in June we will have the most complete image and in this case we will be able to make decisions regarding the modification of monetary policy.’

‘We will have much more confidence with respect to all the data that was mentioned before, that as of June, for example, we will have much more information and which evidently says it clearly, inflation is decelerating. We hope that it will continue to decelerate, but we need to be convinced that inflation converges stably towards the 2% objective and that is why what happens in the labour market is very important’.

‘We will have two Governing Council meetings, one in April and the other in June and I will repeat, I am convinced that in June we will have much more information. What is the reason for waiting until June? The reason for waiting until June is fundamentally the whole closure of the collective agreements that will be concentrated in a very clear way in the first months of the year.’

‘In monetary policy, the adjustment is fine. The difference between April and June, I would say with all due respect, is journalistic... From the point of view that it is the implementation of monetary policy there is not much difference.’


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)
13 March 2024

‘Inflation is the first concern of the French, of course, and here we have the good news: we are in the process of winning the battle against inflation…. We are going to bring inflation down to 2% by next year. Why next year? Because 2% is our objective and it's not just a forecast from the Banque de France. I said this morning that, barring surprises, it's a commitment.’

‘I really believe that victory over inflation is in sight.’

‘Things are going in a very good direction. We remain, the Bank of France, at the ECB, very vigilant until the end, that is to say until 2%.’

‘Yes [rates could be cut from April], and perhaps more likely in June, but we will be very pragmatic. I have always pleaded for pragmatism; we will see according to the facts.’

12 March 2024

‘We are winning the battle against inflation. Inflation has already returned to 3% and will go down to 2% by 2025, as the Banque de France had committed to doing. We will thus resolve the first concern of the French. The perception of this progress undoubtedly takes a little time because disinflation has been slower on food products.’

‘Inflation is the disease, and monetary policy is the cure. We have, with the ECB and Christine Lagarde, taken our responsibility by increasing rates, and it is working.’

‘Now we must guard against two risks. The first would be the haste in lowering rates, which would let inflation start again. The second would, conversely, be remaining tight, which would weigh too much on activity: this risk is now at least equal to the first. Rather than wait-and-see, we must therefore choose gradualism. Since our Governing Council last week, there has been very broad agreement for a rate cut in the spring... knowing that the spring lasts until June 21.’

‘This [the pace of cutting] is actually going to be the most important question now. How fast will we drop and to what “landing zone”? We will have to remain free and pragmatic about the pace, without tying our hands with past excesses of forward guidance. We have significant room for maneuver before returning to an overly accommodating policy: we will have to aim for the right rates, without going back to the zero or ultralow rates of the previous era.’

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)
17 March 2024

‘We are not making explicit guidance, but this is compatible with giving some indication to the market and citizens about what we can do in the future. If one takes into consideration the reduction in inflation in recent months (the underlying inflation as well), the weakness of growth in the euro area, the strength of the transmission of monetary policy, and if our macroeconomic forecasts are fulfilled in the coming months, it is normal for us to start reducing rates soon and June could be a good date to start.’

‘In accordance with the Eurosystem projections, in which we have gained a lot of confidence in recent quarters because the forecast errors regarding the evolution of inflation have been very small and even downward, the rate curve that we are observing at this moment in the markets is compatible with meeting our medium-term inflation objective of 2%. But I don't want to go any further. The level of uncertainty is very high, which justifies that we should not be very explicit about the time path of rates. In fact, the market yield curve is not fixed and reacts to the data that is received, in particular on GDP, employment and, of course, inflation.’

‘Again, our macroeconomic forecasts are now consistent with the inflation target being met in the medium term. According to these forecasts, inflation would reach 2% from the middle of next year and would remain at that level for the remaining quarters until 2026, which is the last year of this projection exercise. And we see that the upside and downside risks are balanced. At the ECB we now have a symmetric inflation target of 2%. This is one of the main novelties of the review of the monetary policy strategy that we adopted in July 2021. This means that we are equally concerned about deviations, both upwards and downwards, from the target. That is why it will be very important to properly calibrate the pattern of interest rate cuts in the coming quarters so that we avoid both too little tightening and too much tightening.’

‘We will have to have the discussion in April. But the central scenario as of today, if the forecasts come true, and we may have surprises in one direction or another, is the one I mentioned earlier. There are analysts who foresee lower growth in the euro area, which would generate a faster disinflationary process and, therefore, consider that the ECB should cut interest rates earlier or even that it should have already started to do so. Other analysts think the opposite. That is completely legitimate. But we have our own view. The important thing is to know how to react depending on how the data are proving you right or wrong and not to anchor unconditionally to any kind of monetary policy path.’


Klaas Knot (De Nederlandsche Bank)
14 March 2024

‘I have personally pencilled in June for a first rate cut. Where do we take it from there? We are data dependent, so I would focus on those meetings in which we have new projections, in September and December. But if incoming data tells us we can do more, the interim meetings should also be available.’

14 March 2024

‘We are confident about the expected fall in inflation, but not yet quite confident enough to cut interest rates now. This will no doubt be possible later this year, if new data confirm our expectations. In this context, we are particularly interested in the how services inflation, wages, productivity and profit margins will develop. Indeed, for monetary policy to succeed once and for all, it is important that everyone plays their part. Trade unions by bringing wage demands back in line with inflation and labour productivity, employers by absorbing the temporary extra increase in wage costs into profits where possible. And the government by not pursuing fiscal policy that fuels inflation. Bringing inflation down to 2% is the most important thing DNB can do to make the economy work better. And I am happy to see that we now appear to be succeeding. Further good news is that the interest rate hikes appear to be causing limited damage to the economy. Although economic growth stalled last year, a fully-fledged recession has been avoided.’


Pierre Wunsch (Belgian National Bank)
13 March 2024

‘We are going to have to make a bet at some point.’

‘But it will remain a cautious move on the basis of what I know today because of the problem that has been commented again and again and again that service inflation and wage developments are still running at levels that are ultimately not compatible with our objective. But of course in our projections we have these going down so we are not going to wait until we see wage development at 3% before we cut rates. I guess we'll do it before and that's why I say it's important we need to take a bet.’

13 March 2024

‘We’re getting closer to a moment where we can start basically acting on the fact that inflation has gone down, is moving in the right direction.’


Mārtiņš Kazāks (Latvijas Banka)
13 March 2024

‘In the Eurozone, inflation is slowing down and approaching the 2% target; the weakness in the economy has dragged on, and we will not see rapid growth this year either; although the labour market is showing some slack, the labor market remains strong and unemployment is at historically low levels; wage growth is faster than price growth, and citizens' purchasing power is gradually recovering from the inflationary shock. … If the forecast comes true, then the inflation target – symmetrically around 2% in the Eurozone in the medium term – will be reached in about three years, which is an acceptable period of time for the medium term. … However, risks and uncertainty remain high. If for inflation, in my opinion, these risks are balanced, then for economic growth they are downward, that is, slower growth is more likely than faster growth. What about monetary policy? Although we did not talk about the reduction of interest rates in the ECB Council at the March meeting, we started a discussion about a possible reduction of rates in the future. Until recently, the risk of reducing interest rates too quickly and driving inflation rates up again, which would require rate hikes well above the current 4% to curb inflation (we remember the painful experience of the late 1970s and early 1980s in Europe and the USA!), was much higher than the risks of starting to reduce rates too late, then, in my opinion, these risks are now beginning to level out and there is no need to delay the reduction of rates too much. If the economy will roughly follow the forecast scenario outlined above, then the decision to start lowering interest rates could be made within the next few meetings. The financial markets currently have a rather similar vision, fully pricing in the first rate cut by 0.25 percentage points already in June. Inflation was rising very fast, and it has also come down fast. The goal of the Governing Council of the ECB is to return inflation to 2% and prevent it from rising again. Uncertainty remains high, so some caution is still necessary. Confident and safe, but cautious. One of the reasons for this year's lower-than-predicted inflation is natural gas prices. With the current unexpectedly low natural gas prices rising, inflation would rise again. The tension in the labour market is still high - although the rates of wage growth have become slower, they are fast and create risks for inflation to be "stubborn" and to decrease very reluctantly. Therefore, as before, we will base our decision-making in the ECB Council on a cool mind and current data. The dragon of inflation is pinned to the ground, a little more and it will be defeated.’

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)
16 March 2024

‘My view is that close to summer is the time to start easing the foot off the monetary policy brake. If inflation is sustainably stabilising at 2%, and no adverse shocks like an energy crisis materialise, I believe we have the preconditions to cut rates several times as the year progresses.’

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)
14 March 2024

‘We need to start cutting rates soon so that our monetary policy does not become too restrictive. It is appropriate to do two rate cuts before the summer break, and four moves throughout the year seem reasonable. Insofar, I concur with the markets’ expectations.’

‘We will have only little new information before the April meeting, especially on wages at the start of 2024 — but we will get a lot more data before the June meeting. I think to cut rates already in April we will need to see the economy crashing and I don’t expect that.’

‘[E]conomic growth in the euro area is much weaker than expected and risks are to the downside, while inflation has come down significantly and the risks are balanced.’

‘So wages are still catching up, not leading inflation. We should not exaggerate the risk of a wage-price-spiral.’

‘On top of that [the pass-through of previous hikes], the ECB’s balance sheet will shrink by around €800 billion this year, through TLTRO repayments and the phasing-out of APP and PEPP reinvestments. Just as interest-rate hikes, this per se leads to tighter financial conditions too.’

‘I don’t buy at all the argument that we can’t cut interest rates before the Fed does so — and almost all of my colleagues agree with that. We are completely independent and the euro area is a large open economy with a flexible exchange rate. We have to do what is necessary for the euro area economy – nothing else.’

‘The case for rate cuts is much more conclusive for the euro area than for the US.’

Expect the deposit rate ‘to gradually go down to 2% at the end of 2025 or the beginning of 2026. … For the moment I don’t see rates go below 2% as it was the case before the pandemic.’

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)
15 March 2024

‘The current data we have suggests that measures of underlying inflation have eased further, which gives us more confidence about returning to our 2% medium-term target.  Against this, domestic inflation remains high, in part driven by strong growth in wages putting upward pressure on services prices. This is an area we will continue to monitor closely. … In light of these new projections, how do I see the interest rate path? Given the continued disinflation we have seen and progress on underlying inflation, it’s becoming clear that there is scope for a change in our monetary policy stance, and, specifically, to make it somewhat less restrictive.  I remain open-minded as to when any reduction in our policy rates should take place.  As I have emphasised before, while our data-dependent approach allows us to make informed and timely policy decisions, it also means having an open mind on the rate path, including the need to hold for longer, should progress on returning inflation sustainably to target be threatened by further shocks, or wage growth turns out to be inconsistent with achieving 2% inflation over the medium-term. The history of monetary policy tells us that rushed decisions tend to be wrong decisions. Patience is a virtue. But waiting for clear and unambiguous evidence is also not realistic and we have to manage the uncertainty and make decisions on the evidence in front of us. My current view is that the picture should be sufficiently clearer when the Governing Council meets in June (as we will have a lot more information – particularly on wage dynamics – available in our deliberations) to give us sufficient confidence to make monetary less restrictive.’

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)
12 March 2024

‘We have reason for some optimism. At the same time, we have been misled by projections before, so let's stay data-dependent and open to acting when we need to act, but also not acting prematurely.’

‘But there are some residual doubts as to whether this[the sustainable convergence of inflation to 2% next year] will be the case.’

‘The vision for June is very much related to the extent to which our projections turn out to be true. But it might be that some of the assumptions built into those projections are somewhat optimistic, so we have to remain data-dependent.’

‘We also won’t have any ECB projections, so it could be premature to make a judgement [in April].’

‘China is struggling. It may be that the economic problems there are stronger than feared, and this could take a few tenths of a percentage point from European growth rates, which in turn would have a disinflationary effect and mean rates have to go lower.’

‘If and as the data are strong enough for the ECB to cut first then it could happen, but it is not without risk of some market repricing - especially if the Fed decision is linked to some sudden, major change in inflation or employment data. Europe is not the 13th district of the Fed, but what the Fed does matters.’

08 March 2024

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


Boris Vujčić (Croatian National Bank)
15 March 2024

‘If there’s a significantly faster slowdown of the economy, that would then of course have consequences for interest-rate policy. Given where we are right now, probably not affecting the timing of the first cut, but it could have an effect on the pace.’

‘The problems that we see in Germany are more of a structural nature, rather than cyclical. They’re connected on one hand with energy costs, a problem that existed already before the energy price shock following Russian invasion, and, on the other hand to the car-industry transition to EVs. That shouldn’t be confused with the rate cycle.’

‘“It would be best to have a gradual adjustment of monetary policy, which means a series of 25bp cuts. At which pace, we’ll have to see later on.”


Gaston Reinesch (Central Bank of Luxembourg)
14 March 2024

‘The incoming data and the latest ECB staff macroeconomic projections made the Governing Council more, but not yet sufficiently confident about a timely return of inflation towards its medium-term target. On 7 March 2024, the Governing Council therefore again decided to keep the three key ECB interest rates unchanged at 4.00% (deposit facility), 4.50% (main refinancing operations) and 4.75% (marginal lending facility). The Governing Council also restated it will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction. Provided the incoming data will confirm, in the light of the June 2024 Eurosystem staff macroeconomic projections, the current prospect of inflation returning timely to its 2% medium-term target, it is not at all groundless to anticipate a first rate reduction towards the end of the second quarter of 2024.’

‘The outlook for domestic price pressures, as reflected in labour cost and profit growth, remains uncertain at this stage. Moreover, the downward revision to HICP inflation in 2024 according to the March 2024 ECB staff projections is mainly due to the more volatile energy component.’


Constantinos Herodotou (Central Bank of Cyprus)


Edward Scicluna (Central Bank of Malta)