ECB's Müller: Current Rate Levels Appropriate as Inflation Nears 2% and Economy Gradually Recovers

31 October 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Madis Müller said on Friday that the current level of interest rates was adequate with inflation near 2% and the economy showing signs of recovery.

In a blogpost published on the website of the Eesti Pank, which he heads, Müller said that “[g]iven that the pace of inflation in the euro area remains close to 2% and the economic situation has gradually improved, the current level of interest rates is appropriate.”

He noted that rates are neither holding back economic growth nor fueling inflation.

The latest economic data suggested that the September ECB projections were still “valid”, he said, adding that inflation was now close to 2% and the economy was “recovering slowly.”

He cautioned, however, that geopolitical developments and trade tensions could either accelerate or hinder the recovery. In particular, he warned that Chinese trade restrictions on rare earth materials could disrupt supply chains and raise prices for specific goods.

Investments in infrastructure and defense typically provided modest support to growth but also carried inflationary risks, he said, adding that one of the most important financial risks in the long term would be how governments deal with large debts and deficits stemming from such spending needs.

Müller also observed that food prices had increased faster than average inflation in the last few years.