ECB’s Šimkus Urges December Cut, Arguing Risk Management

20 September 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gediminas Šimkus on Saturday made evident again his preference for an interest rate cut in December.

In an interview with Bloomberg, Šimkus, who heads the Bank of Lithuania, said, “From a risk-management perspective, it’s better to cut than not.”

“The inflation target would benefit, the economy would benefit, so we should do it in December and then wait and see,” the agency quoted him as saying.

“It’s hard to think how inflation won’t undershoot our target in the medium term,” he explained. “I’d definitely expect our projection for 2028 to be below 2%. It’s difficult to imagine a scenario in which inflation will be above the target.

In this context, he cited Chinese imports, the euro’s appreciation and the potential for delays in the Emissions Trading System 2. Core inflation was already seen undershooting, wages were decelerating and the contribution of higher government spending was unsure but in any case not imminent, he argued.

“Of course there are some upside risks but those on the downside definitely dominate,” he said.