ECB’s Wunsch Calls for Caution Regarding Future Rate Cuts

1 July 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – Further interest rate cuts could pose a challenge if inflation continues to hover around 2.5%, European Central Bank Governing Council member Pierre Wunsch said Monday.

Speaking with Bloomberg TV, Wunsch, who heads the National Bank of Belgium, said, ‘If we’re still moving around 2.5% and contemplate other cuts, I think at some point it becomes more difficult. So we would really need to have strong indications that we are moving below 2.5% to 2%.’

According to Wunsch, the first two rate reductions were ‘relatively easy’, assuming inflation around 2.5%, since monetary policy would still be restrictive.

A July cut could be an option in theory, he said and emphasised that more focus should be placed on the meetings where more information would be available.

‘Broadly speaking, looking back at the six or nine previous months, we are still on track, still in line with our forecast. The most difficult part of it is behind us’, he said.