ECB’s Makhlouf: ‘I Remain Open-Minded on Slope’ of Rate Path

25 November 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Monday said that he remained open-minded about how fast the ECB cut interest rates.

Speaking at the Society of Professional Economists, Makhlouf, who heads the Central Bank of Ireland, said that he was ‘increasingly confident of reaching our 2% inflation target during 2025, but the stickiness of services inflation and elevated wage growth leave some room for caution.’

He would like services inflation, now close to 4%, to approach 3%, he said.

‘In support of this, there are some signs of labour market loosening, which will help to ease upward wage pressures’, he said. ‘Forward-looking surveys and wage trackers also point to a slowing of wage growth next year.’

Although 3Q GDP in the euro area was near the high end of the September projections, the November PMIs and new orders data were weak, he observed.

‘Weaker growth is a downside risk to inflation, and we will know more after the updated Eurosystem staff projections in December’, he said.

The policy stance was clearly still restrictive and rates were headed downward, he said.

‘Given the volatility and the data and the substantial uncertainty regarding economic policy in trade partners, I remain open-minded on slope of this downward trajectory’, he said. ‘This is in line with our data-dependent approach to setting policy.’