ECB’s Makhlouf: “Not Pre-Committing to a Particular Rate Path”

14 October 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Tuesday repeated his positive assessment of European monetary policy, growth and inflation and rejected pre-commitment to any evolution of interest rates.

In a speech in Washington, Makhlouf, who heads the Central Bank of Ireland, said, “We continue to be in a good place with the disinflationary process behind us, the European economy showing resilience and inflation where we want it to be.”

Makhlouf noted that survey data pointed to “positive underlying momentum” for the economy.

“While the trade agreement with the US has reduced uncertainty somewhat, the overall impact of the change in the global policy environment will only become clear over time,” he said.

There was still the risk of a flare-up in trade tensions hurting exports, investment and consumption, he cautioned, while spending on defense and infrastructure, along with structural reforms, could boost growth.

“We are not pre-committing to a particular rate path and will continue to determine the appropriate monetary policy stance by following a data-dependent and meeting-by-meeting approach,” he said.

The Governing Council would decide on the basis of its “assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission,” he said.

“Geoeconomic fragmentation … poses several risks to the inflation and growth outlook” of the euro area, Makhlouf said. “As US tariffs are global in nature, there is the potential that trade diversion is stronger than the current (rather limited) effect assumed in the latest ECB staff projection.”

Still, according to the ECB’s scenario analysis, the impact on the euro area would be only “mild,” he noted. However, Chinese firms might reduce their selling prices to counter tariffs, in which case “an increase in (cheaper) Chinese imports has a large negative impact on inflation and growth,” he said.

Tariffs could also lead to supply constraints, he continued. If this occurred to the extent of the pandemic, inflation would “rise considerably,” though the growth impact would be “minimal.”