ECB’s Wunsch: “We Are in a Good Place”

3 October 2025

By David Barwick – AMSTERDAM (Econostream) – European Central Bank Governing Council member Pierre Wunsch on Friday endorsed ECB President Christine Lagarde’s view that euro area monetary policy was appropriately situated.

During a panel discussion at a farewell symposium for former De Nederlandsche Bank President Klaas Knot, Wunsch, who heads the Belgian National Bank, said, “We are in a good place.”

Government spending alone was not the answer to low potential growth in the region, he said. “I’m not with those that believe were going to solve our potential growth problems in Europe with yet another … demand shock,” he said. Addressing the supply side was key, he said.

Inflation was “still a risk,” he said, less as a warning motivated specifically by the current situation than as a general note of caution in the context of politicians’ attempt to curtail central bank independence.

Wunsch again took to task the ECB’s models, which he accused of having let policymakers down in the wake of recent shocks.

“Models are good in peacetime, and they fail you when you most need them. That’s a fact of life,” he said. “So, we need to use models, but we also need to be able to get out of the models.”

“There’s only so much you can hope to capture with a model,” he said, noting models’ tendency to apply past patterns to predictions of the future.

The ECB had “become much more symmetric” in terms of a hawkish/dovish bias in policymaking, he said. “The ECB is structurally a bit more on the dovish side, for whatever reasons,” he said. “Now we are much closer to being balanced.”

In other comments, Wunsch said that “we tend to underestimate” the long-term consequences of losses associated with central bank quantitative easing.