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ECB’s Cipollone: We Have More Reasons for Cutting Further Than in Last Meeting

24 March 2025

ECB’s Cipollone: We Have More Reasons for Cutting Further Than in Last Meeting
Piero Cipollone, Executive Board member of the European Central Bank, at the Joint Conference of the European Commission and the ECB on June 18, 2024. Photo by the ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – European Central Bank Executive Board member Piero Cipollone said on Monday that the ECB now had more reasons to cut further than in its last monetary policy meeting on March 6.

In an interview with Spanish newspaper Expansión, Cipollone said that at the time of that meeting markets had priced in a reduction in interest rates to below 2%.

The ECB’s macroeconomic projections showed the inflation target reached by early 2026, taking into account this market path, he said.

‘Since then, not only has this narrative been confirmed, but key issues have arisen that have strengthened the arguments in favour of continuing to lower rates’, he said.

Lower energy prices, a higher euro and an increase in real rates contributed to lower inflation, he stated.

‘And if the United States were to impose tariffs on European exports, that would have a negative impact on demand, which would further strengthen the downward trend in inflation’, he said.

While assuring that the ECB would go into each meeting with ‘an open mind’ and stick to the meeting-by-meeting data-dependent approach, Cipollone suggested that rates would be cut further.

‘[C]urrent conditions make it conceivable that monetary policy will be less restrictive as, at the moment, the outlook remains consistent with our March projections’, he said.

Latest data available showed that the inflation target would likely be reached sooner than in early 2026, according to Cipollone.

The restrictiveness sentence on the ECB’s statement was not a declaration of intent about future moves, but there was room for more cuts ‘if the path and our narrative are confirmed’.

Asked about his comments about a shrinking balance sheet reducing the impact of interest rate cuts, Cipollone said that quantitative tightening restricted banks’ lending capacity.

‘So, we need to monitor this effect and take it into consideration when calibrating our monetary policy stance’, he added.

 

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