ECB’s Kažimír: Must Avoid Fine-Tuning, Next Move Could be “in Either Direction”

3 November 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Peter Kažimír said on Monday that the ECB should not fine-tune its policy stance and that the next interest rate move could go in either direction.

In a blogpost published on the website of the National Bank of Slovakia, which he heads, Kažimír repeated that the ECB was in a “good place” and said that “it is no time or need for fine-tuning or over-engineering.”

He described inflation as close to the 2% target and growth as “weak but resilient.” Current interest rate levels were within neutral territory, putting the ECB in a “good position,” he said.

New data had confirmed the baseline in the September projections, he said, but added that closer inspection suggested caution was still warranted.

“Core inflation has been surprising us a little bit on the upside,” he said. “The data for compensation for employees came in somewhat stronger than expected.”

Kažimír cautioned against overanalyzing small deviations from target, stressing that the ECB should not declare victory prematurely.

He said policymakers should remain alert to upside risks to inflation but also cited labor market softening, geopolitical tensions, and financial-market risks as potential downside factors.

“From where we stand today, I see the risk as broadly balanced for both the economy and inflation,” he added.

He reiterated that the ECB should resist the temptation to “fine-tune inflation dynamics” in pursuit of perfection via small interest rate moves, warning that this could create volatility.

The baseline narrative was still “intact” and the December forecast would bring lots of fresh information, he said. The ECB, he added, should stay data-dependent, “keeping all its options open.”

“It means our next move — when it comes — could, in principle, be in either direction, depending on the signals we receive,” he said. “Any automatic pilot is off the table.”