ECB’s Escrivá: ‘We Are at the End of the Easing Cycle’

28 July 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member José Luis Escrivá said on Monday that the ECB was at the end of its easing cycle.

In a panel discussion at the Foro Económico de El Norte de Castilla in Valladolid, Spain, Escrivá, who heads the Bank of Spain, said that euro area inflation was anchored at 2% given the ECB projections, market inflation expectations and current spot data.

‘As we have lowered rates, we think we have reached a level where the situation is more or less normalised, and we’re at the end of the rate-cutting cycle’, he said.

However, Escrivá said that uncertainty was still high, especially due to some elements of US policies.

‘In that context, when we decide on interest rates we look at the central scenario, which is telling us that 2% will be maintained in the coming years’, he said. ‘But we also have to look at the inflation risks balance, and there are factors that could move in both directions.’

Given inflation was now at 2%, the ECB was doing ‘fine’, according to Escrivá, who said nevertheless that the institution should remain ‘very agile’ and maintain ‘full optionality’.

‘[A]ny of the things I have mentioned could move in opposite directions for inflation and we would need to be ready to respond one way or the other’, he added.

The biggest impact stemming from US tariffs would be lower economic growth in the medium term and higher inflation, which would mainly affect the US, he said.

‘The rest of the world will face a much more moderate impact depending on the relative weight of their trade with the US and can try to offset it by expanding trade with the rest of the world’, he said.