ECB’s Kažimír: September Rate Cut Definitely Doesn’t Mean We’ll Cut at Each Meeting

16 September 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Peter Kažimír on Monday said that the latest rate cut should not be taken as a sign that the ECB would start making similar decisions every six weeks.

In a statement issued on the website of the National Bank of Slovakia, which he heads, Kažimír called last Thursday’s decision by the ECB in favour of a rate cut ‘straightforward and unanimous’, leaving policy ‘sufficiently tight’ while still offering ‘some relief to our economy.’

However, he cautioned, it ‘definitely doesn’t mean we’re on a path to cut rates every time we meet.’

From his point of view, he said, the risks to medium-term inflation remained on the upside.

‘I would require a significant shift, a powerful signal, concerning the outlook to consider backing another cut in October’, he said. ‘But the fact is that very little new information is in the pipeline.’

‘We will almost surely need to wait until December for a clearer picture before making our next move’, he added.

The way forward was ‘slow and steady’, keeping in mind the potential for developments over the next quarter to disappoint, he said. Services inflation in particular was still high, he said.

‘Our outlook relies on a significant slowdown next year, but this slowdown might not come’, he said.

The recovery had been ‘disappointingly weak’, he said. ‘There is a sense of lack of confidence everywhere.’

The challenges faced by Europe’s economy couldn’t be addressed by lower borrowing costs,however,  being structural, he said.