ECB’s Reinesch: 'Not Totally Unreasonable' to Think Rates Will Move in Steps to 2.5% at Beginning of Spring 2025

13 December 2024

By David Barwick – FRANKFURT (Econostream) – The European Central Bank is likely to cut interest rates in steps to 2.5% by the start of spring 2025 if its central scenario continues to materialise, according to ECB Governing Council member Gaston Reinesch on Friday.

In an interview with Luxembourg’s public service radio station 100.7, Reinesch, who heads the Central Bank of Luxembourg, said, ‘If we are effectively on track towards the goal of 2% inflation, then the assumption of a certain logic would not be totally unreasonable that the interest rate, which is now 3%, will move in steps to 2.5% at the beginning of spring of next year.’

‘[W]e are well on our way to achieving that goal’ of price stability, he said. ‘If you look at the projections that have also been presented to the Governing Council, you can assume that somehow, let's say, at the beginning of the spring next year, the 2% will more or less - in a sustainable way – come.’

According to the radio station, Reinesch stressed that this was the central scenario and that there were many sources of uncertainty, including US President-elect Donald Trump’s intentions and political instability in France and Germany.

‘But if no exceptional phenomenon develops in the context of such uncertainties in that scenario, one can effectively hope that we will reach the goal of 2% at the beginning of spring next year’, he said.