ECB’s Wunsch: Probability of Another Rate Cut Has Been Receding

16 October 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Pierre Wunsch on Thursday said that the likelihood of a renewed ECB interest rate cut had been diminishing.

Wunsch, who heads the Belgian National Bank, told CNBC, “I would say that the probability that we would cut again has been receding over the last few weeks or months.”

“I would say we’re essentially at target, and then it becomes a discussion about the balance of risks,” he said. “I would say that risks are broadly balanced, and I don’t see major risks on the upside or downside.”

“If I would have to choose, I probably would say that I see a bit more risk on the downside because of the strong euro, cheap Chinese imports and an economy that’s still weak,” he continued. The economy was “growing, but it’s not a strong recovery, that’s for sure.”

Asked about the ECB’s reaction to a continued euro appreciation, “if it’s a one-off, okay,” he said. Were the strengthening to be “structural” and thus persist, he said, “We just look at what the impact might be on inflation and then react to that as much as we would react to anything that would impact inflation on the downside.”

Uncertainty has been higher with respect to growth than inflation, he said. “But our economy’s been very resilient, that’s a surprise,” he said. Risks to the outlook “are more coming from the US, as they have been for the last two quarters,” he said.

The prospect of higher German government spending “had a very positive impact on the narrative,” he said. The negative impact on Europe of tariffs was estimated at “a bit more than a half percent of growth over two years’ time,” he said, “but from ’26, it would be more or less compensated by the fiscal stimulus, which is essentially in Germany.”

Still, “the Germany economy remains weak,” partly for structural reasons, he said.