By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Pierre Wunsch on Sunday said that the ECB’s monetary easing was subject to some risk related to high services inflation

‘In our baseline scenario, if our forecast becomes reality, we should be able to lower interest rates further’, Wunsch, who heads the National Bank of Belgium, said during a news programme on Belgian public Dutch-language TV station VRT. ‘But I see a small risk that this will happen more slowly if services inflation remains elevated.’

In contrast to headline inflation, which was apparently ‘more or less under control’, services inflation was still ‘very high, around 4%’, he said. ‘So, it’s not that easy, and if the recovery is coming, and we hope it is, it’s quite possible that inflation will stay above 2% for a longer time.’

The economic upturn was taking place more slowly than envisioned, he observed. ‘We thought we would see a recovery in 2023, but it didn’t arrive. In 2024, it’s going relatively slow. It’s still partly cyclical, but increasingly structural.’