ECB’s Kažimír: No Reason to Pause or Talk About a Cut of a Different Size

21 January 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Peter Kažimír said on Tuesday that he saw no reason to pause interest rate cuts or to discuss larger moves.

In an interview with Bloomberg, Kažimír, who heads the National Bank of Slovakia, said that ‘[t]he incoming data justify a certain continuation of our path; I see no reason to pause and I also see no reason to talk about a cut of a different size.’

The current 25bp steps allowed the ECB to have momentum while maintaining some flexibility, which was especially needed in times of uncertainty, he said.

‘Three or four cuts in a row are feasible, but at the same time, I must say that we cannot swear to it’, he indicated.

Regarding the policy decision on January 30, Kažimír said that ‘for me personally, the deal is done.’

The ECB had to strike the right balance ‘between acting too cautiously and too aggressively,’ he said.

They were on the ‘right track’ in converging to the 2% inflation target, but the job was not yet done, according to Kažimír.

As for the neutral level, he said it was around 2% and 3%, ‘probably closer to 2% than to 3%.’

Trump’s policies’ negative consequences for the economy were more distressing than their effect on inflation, he stated.

‘We are data-dependent, not Fed-dependent,’ he said. ‘We’re monitoring the exchange rate because it might influence inflation via import prices, but we should avoid conclusions based on short-term developments.’