Countdown to April: Tentative ECB Governing Council Tally Doesn’t Yet Indicate Pause

10 March 2025

Countdown to April: Tentative ECB Governing Council Tally Doesn’t Yet Indicate Pause

By David Barwick – FRANKFURT (Econostream) – An initial member-by-member review of the European Central Bank Governing Council with respect to the appetite to cut interest rates again in April suggests that those in favour of pausing may not be breaking down an open door.

It must be noted that besides all the many sources of uncertainty to which such a tally is subject, it is quite simply still very early in the game.

Even without the high potential for currently unanticipated developments to make clearer the appropriate course of action in five and a half weeks, it is just so that most Council members have not yet aired their updated views.

To be sure, comments some made prior to last week’s monetary policy meeting could be considered indicative of a frame of mind less susceptible to change. One never needs to harbour much doubt about where some Council members stand.

For now, we split policymakers into three categories: those probably more likely to support pausing in April, those we would refrain for the moment from classifying, and those probably more likely to support cutting in April.

We wind up with seven Governing Council members in the group of those probably more likely to support pausing in April. Another nine are in the group of those we aren’t calling either way, while those we suspect are leaning towards cutting again next month also number nine (the total being 25 because the Bank of Slovenia still lacks a governor).

Certainly there is room to disagree here or there; this is no exact science. Still, referring solely to those Council members whose inclination is currently less clear, it is interesting to note that if just under half of them go one way and just over half go the other way, then April would likely bring more policy easing.

Of course, this is simplistic, and not only in the sense of assigning the policy preferences of ECB President Christine Lagarde and Chief Economist Philip Lane a weight equal to that of any other Council member.

Therefore, we regard the below as preliminary and highly tentative, and look forward over the coming weeks to developments – and policymakers’ comments on these – that will allow for much more robust conclusions.

Probably more likely to support pausing in April:

Austrian National Bank Governor Robert Holzmann:

  • 17 February 2025: ‘[D]efinitely, a decision in favour of another cut gets harder and harder, both now and beyond March.’

ECB Executive Board member Isabel Schnabel:

  • 25 February 2025: ‘[O]ver the past year, the degree of policy restraint has declined appreciably – to a point where we can no longer say with confidence that our policy is restrictive.’

Eesti Pank Governor Madis Müller:

  • 07 March 2025: ‘[W]e as central bankers need to be vigilant, as several factors, such as tariffs or the impact of defense spending, could accelerate price increases in the near future. To me, this means that we need to be increasingly cautious about further interest rate cuts.’

National Bank of Belgium Governor Pierre Wunsch:

  • 24 February 2025: ‘I’m not pleading for a pause in April, but we must not sleepwalk to 2% without thinking about it. Let’s keep it open: If the data justify a new cut, we’ll cut. If they don’t, we might have to pause.’

National Bank of Slovakia Governor Peter Kažimír:

  • 10 March 2025: ‘Despite encouraging inflation trends, I am still looking for undeniable confirmation that disinflation will stay. Unfortunately, inflation risks remain tilted to the upside.’

Dutch National Bank Governor Klaas Knot

Central Bank of Luxembourg Governor Gaston Reinesch

Too unclear to call:

ECB President Christine Lagarde

ECB Chief Economist Philip Lane

ECB Vice President Luis de Guindos

ECB Executive Board member Frank Elderson

Banco de España Governor José Luis Escrivá

Croatian National Bank Governor Boris Vujčić

Central Bank of Cyprus Governor Christodoulos Patsalides

Central Bank of Ireland Governor Gabriel Makhlouf

Central Bank of Malta Acting Governor Alexander Demarco

Probably more likely to support cutting in April:

Banco de Portugal Governor Mario Centeno:

  • 07 March 2025: ‘We do think that the journey is very clear … We do have in our baseline a projection of inflation going to 2% in the medium term, but that includes further adjustment in the rates.’

Bank of Lithuania Chairman of the Board Gediminas Šimkus:

  • 20 February 2025: ‘Generally, I agree with market expectations that there might be another three cuts between now and the end of 2025. … the direction of travel is clear in a context of weak economic developments and with data showing that we’ve hit our medium-term inflation target. So, I don't see any good reason for policy to stay anywhere far from the interval I described as nominal neutral, which is around 2%. Policy needs to return to this interval around 2%.’

Latvijas Banka Governor Mārtiņš Kazāks:

  • 07 March 2025: ‘If we stay within the baseline scenario, then of course the rate scenario is incorporated in the forecasts. So, of course that can still materialise. The question is how the world will look in April, what will have changed, whether there will be a shift in the outlook that forces a shift in our baseline.’

Banque de France Governor François Villeroy de Galhau:

  • 07 March 2025: ‘When the weather becomes more agitated like today, you must first keep a very clear course.’

Bundesbank President Joachim Nagel:

  • 25 February 2025: ‘[P]erhaps I will end up sometime with the conclusion that we're no longer tight. But from today's perspective, I cannot say that.’

Bank of Greece Governor Yannis Stournaras:

  • 25 February 2025: ‘[G]iven the information we currently have, I expect that interest rates will reach 2% by the autumn of this year and that this is likely to be the terminal rate.’

ECB Executive Board member Piero Cipollone:

  • 18 February 2025: ‘To strike the right balance, we should ensure that our rate decisions adequately compensate for the tightening induced by the reduction of our balance sheet.’

Banca d’Italia Governor Fabio Panetta:

  • 18 February 2025: ‘[M]onetary policy continues to exert a downward pressure on economic activity and on inflation, an effect that is less and less necessary with near-target inflation and persistently weak domestic demand. According to the projections published by the Eurosystem in December, inflation would hit the target if the key interest rates were lowered to around 2% in mid-2025, in line with the market expectations prevailing at the time. Under this scenario, a less decisive easing of monetary policy could lead to excessively low inflation in the medium term.’

Bank of Finland Governor Olli Rehn