Countdown to April: de Guindos, Nagel Shift to Camp of the Uncertain; Stournaras and Kažimír Stay Put

3 April 2025

By David Barwick – FRANKFURT (Econostream) – Our last member-by-member review of the European Central Bank Governing Council was only Tuesday, but the announcement on Wednesday evening of US tariffs has led to a couple of changes ostensibly favouring a pause.

We say ‘ostensibly’ because we remain fundamentally more convinced by the arguments for a cut but of course can exclude neither developments that more clearly call for a pause, nor that the Governing Council as a whole simply takes another view.

In any case, with two weeks to go and a lot of dust yet to settle – with more likely to be stirred up all the while – such a tally must be considered a particularly inexact science now.

Of the four Council members who have already piped up since the tariffs were unveiled, two had been in the group of those probably more likely to support cutting in April, but are now among those of indeterminate inclination.

Those two are ECB Vice President Luis de Guindos, whose speech on Thursday morning was markedly less optimistic than he had sounded two weeks ago (see analysis), and Bundesbank President Joachim Nagel, who in a brief statement today called for the Eurosystem to 'reassess the situation'.

The third Council member to have already spoken is Bank of Greece Governor Yannis Stournaras, who however denied that the tariffs implied any ‘obstacle to a further rate cut in April’ and thus remains in the group of those probably more likely to support cutting two weeks from today.

The last Council member from whom a reaction has come is National Bank of Slovakia Governor Peter Kažimír, who has been reported on social media to have commented with reference to the tariffs that ‘[t]hese developments are, to a large extent, already factored into our forecasts among the worst scenarios we must brace for.’

Kažimír, who is relatively hawkish, was fairly clearly in the camp of those likely to embrace a pause, and if indeed he considers the tariffs to have been largely ‘factored into our forecasts’, then we think it appropriate to leave him among those sceptical of cutting again.

We thus continue to see six Governing Council members in the group of those probably more likely to support pausing this month.

Another 11 however (versus nine on Tuesday) are in the group of those we aren’t calling either way, while those we suspect are leaning towards cutting again this month now number eight instead of ten previously. The total is 25 because the Bank of Slovenia still lacks a governor.

Again, the tariff announcement is still quite new and its implications far from clear, whether with respect to the euro (which has for now strengthened considerably, supporting disinflation), counter-tariffs, redirection of trade or the medium-term economic impact (which is also likely to support disinflation).

The tally thus remains very tentative and we would be reluctant to make too much of the nominal weakening of the support for a cut.

Probably more likely to support pausing in April:

Austrian National Bank Governor Robert Holzmann:

14 March 2025: ‘I am in favour of a possible interest rate pause in April.’

ECB Executive Board member Isabel Schnabel:

08 March 2025: The risk that inflation will remain above 2% longer than expected is higher than the risk that it falls sustainably below 2%.’

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.’

Central Bank of Luxembourg Governor Gaston Reinesch

Too unclear to call:

ECB President Christine Lagarde

31 March 2025: ‘It is a daily struggle. We are almost where we should be, but we have to remain there, so that’s why I say it’s a constant battle. … We are all absolutely determined to arrive at this target, which is a target of 2%. In terms of the path to get there, some want to gallop, to go very fast. Others say let’s do a small trot, let’s wait to see what the obstacles are along the way.’

ECB Vice President Luis de Guindos:

03 April 2025: ‘[U]ncertainty surrounding the inflation outlook remains high, mainly on account of increasing friction in global trade. An escalation in trade tensions could see the euro depreciate and import costs rise, while much needed defence and infrastructure spending could raise inflation via aggregate demand. Geopolitical tensions could also lead to higher inflation owing to trade disruptions, rising commodity prices and energy costs.’

ECB Chief Economist Philip Lane

Banca d’Italia Governor Fabio Panetta:

31 March 2025: ‘Monetary policy decisions will have to balance two aspects. On the one hand, the weakness of the European economy and geopolitical tensions are curbing consumption and investment, holding down inflation. On the other hand, the growing uncertainty – due above all to the sometimes contradictory announcements on US trade policies – requires a prudent approach to policy rate cuts.’

Dutch National Bank Governor Klaas Knot:

20 March 2025: ‘Can we afford to lower [interest rates]? I remain open-minded, but we do have to think it through, and there is time for that, but there is still too much unfamiliarity in that area. … Policy from the US, which can generate inflation, doesn’t necessarily jump over to the EU, but you can also argue for a story that growth is going to be weaker. It is incredibly difficult to say where interest rates are going to move.’

ECB Executive Board member Frank Elderson

Bundesbank President Joachim Nagel:

03 April 2025: ‘This [tariff announcement] will also put monetary policy achievements to the test. We will have to reassess the situation in the Eurosystem.’

Banco de España Governor José Luis Escrivá:

24 March 2025: ‘Risks to economic growth are tilted to the downside more than the upside … With inflation it is hard, there is uncertainty coming from both directions. … We have never seen such low credibility around the baseline scenario as we are seeing now. It is very hard to define alternative scenarios, in fact risks are two-sided over the baseline scenario.’

Croatian National Bank Governor Boris Vujčić

Central Bank of Cyprus Governor Christodoulos Patsalides

Central Bank of Ireland Governor Gabriel Makhlouf:

24 March 2025: ‘My overall sense is that we’re living in a period of significant change, significant volatility, and the most important thing that we can do is keep a clear head, understand exactly what is happening, and then make a decision on how to respond and start talking about what our view is as to its impact. … We do, however, need to be pretty prudent and pretty cautious about changes to our monetary policy stance when we’re not yet at target and when quite exceptional events are happening around the world, which could have a direct effect on inflation. … I remain careful and cautious about how we’re going to move from our current stance.’

Probably more likely to support cutting in April:

Central Bank of Malta Acting Governor Alexander Demarco:

19 March 2025: ‘Our latest projections show us pretty much on track in achieving our objective, even if reaching 2% has perhaps been pushed out to early 2026 or late 2025. But the revisions of the previous projections were driven entirely by energy prices and the exchange rate, and since then, we've seen important changes in these components, both in the direction of lower price pressures. And maybe there will be effects from tariffs; this is unclear and I am not even sure this will be clear in April. So, for now, we are guided by the projections we have, but if energy prices and the exchange rate remain as they are today, the projections will probably show 2% achieved even earlier. So, I’m not sure it’s the right time to pause, because the evidence still shows us moving in the right direction.’

Banco de Portugal Governor Mario Centeno:

26 March 2025: ‘I don't see any reason so far to deviate from the previous path. The impact of new US policies and higher uncertainty has been revealed faster than expected. The impact is negative on growth and eventually will also be negative on prices, because they are two sides of the same coin.’

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:

27 March 2025: ‘The increase of long-term yields, all other things being equal, means a tightening of financial conditions which we have to incorporate in our assessment.’

Bank of Greece Governor Yannis Stournaras:

03 April 2025: ‘In my view recent developments do not constitute an obstacle to a further rate cut in April.’

ECB Executive Board member Piero Cipollone:

24 March 2025: ‘At the time of our March meeting, markets were pricing in a reduction in interest rates over the coming months, including going below 2%, with rates stabilising around that level. To produce our macroeconomic projections we take as given the rate path being priced in by markets and, despite rates being on a downward trajectory, the projections showed inflation converging towards our target at the beginning of 2026, with slightly weaker growth. 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.’

Bank of Finland Governor Olli Rehn:

18 March 2025: ‘Wage inflation has largely decelerated, and forward-looking wage indicators point to a clear slowdown in wage growth. Most measures of core inflation − which excludes energy and food prices − also point to a sustained convergence of inflation around the 2% target over the medium term.’