ECB’s Vujčić: Monetary Policy to Be Loosened, But Stay Tight Enough to Ensure Return to 2%

6 May 2024

By David Barwick – VILNIUS (Econostream) – The European Central Bank will likely loosen monetary policy, but will also keep it sufficiently restrictive so as to ensure the restoration of price stability, European Central Bank Governing Council member Boris Vujčić said Monday.

Speaking at a press conference in the Lithuanian capital, Vujčić, who heads the Croatian National Bank, declined to predict how many rate cuts would take place before year’s end, invoking data-dependence.

‘If the projections tend as we see it at the moment, I would expect the loosening of the monetary policy, yes, but still staying in the restrictive enough territory to make sure that the inflation is brought down to the 2% target’, he said.

‘I would agree that the incoming data so far are quite consistent with our projections’, he said. ‘But again, we will stay data-dependent and wait for more data to see whether that continues to be so in the coming weeks and months, as there are a number of data that will come still even before the June meeting.’

What level of interest rates divided restrictive from non-restrictive policy ‘changes with new sets of data, and that’s why it’s impossible to say exactly where it is now’, he said.

It was clear that current policy was restrictive, ‘and we want to stay there as long as we want to make sure that we are comfortable that the inflation rate is moving toward our medium-term goal’, he said. ‘This dividing line ... of restrictive versus non-restrictive will be also discovered by us...’