ECB’s Escrivá Calls for Caution but Refuses to Endorse Pausing Rate Cuts Already

23 February 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member José Luis Escrivá said on Sunday that the ECB should proceed with caution, but he refused to endorse calls to start pausing interest rate cuts.

In an interview with Spanish newspaper La Vanguardia, Escrivá, who heads the Banco de España, said that in a situation of ‘extraordinary uncertainty’, it was advisable to remain ‘cautious’.

The ECB had to continue ‘collecting information, waiting until some questions about different elements get answered and seeing how geopolitical dynamics play out’, he said.

Asked if he agreed with ECB Executive Board member Isabel Schnabel about a potential pause in interest rate cuts, Escrivá answered, ‘No, I am not saying that. I am saying that we must be cautious.’

The baseline scenario of a gradual return to 2% inflation was materialising, he said.

‘Inflation printed at 2.5% in January, so there is still a way to go until the 2% target, partly because services inflation is resisting slowing down’, he said.

‘We’ll see if it speeds up its pace of moderation in the coming months, as we expect, based on slower wage growth and statistical base effects that will create downward pressure’, he said.

For Escrivá, financial markets also had to be monitored, as markets were not pricing in a lot of risks that could end up generating ‘undesirable dynamics’.

Regarding the divergence between the ECB and the US Federal Reserve, Escrivá said that he was ‘not necessarily’ concerned, because the inflation and economic growth stories in the two jurisdictions were obviously different.

‘Therefore, to some extent, it is natural that monetary policy in these two areas shows some differences’, he added.