ECB’s Šimkus: ‘Can Afford a Less Restrictive Environment Very Soon’

12 April 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Gediminas Šimkus on Friday said that it would soon be possible to adopt a less restrictive monetary policy, as there had been good news on inflation.

During a panel at the Delphi Economic Forum IX in Greece, Šimkus, who heads the Bank of Lithuania, said, ‘There are clearly very good news on the inflation front, but to declare victory, it’s too early. We’re not yet over, but we’ve made substantial progress, and we can afford a less restrictive environment very soon.’

Even with inflation on a downward trend and with the process close to the end, the ‘last mile is still ahead of us’, he said.

‘I can summarise even now that [the ECB’s] monetary policy worked, it was effective, it really helped to bring down inflation on the disinflationary trend and, hopefully, to the 2% target quite soon’, he said.

At the same time inflation was projected to converge to the 2% target, the euro area economy had been flat for several quarters and the labour market was still tight, he said.

In this context, he warned, ‘I think it’s very important not to be overconfident.’

‘Victory maybe not complete, but inflation [is] clearly on the downward trend. Let’s fight it until the end’, he said.