ECB’s Makhlouf: “Very Comfortable with Where We Are;” "Open-Minded" on Next Step

17 November 2025

By David Barwick – DUBLIN (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Monday said that he was content with the ECB’s current monetary policy stance and open to whatever rate path developments dictated.

Responding to questions at a press conference of the Central Bank of Ireland, which he heads, Makhlouf said that while he was “always interested in how the market sees what we’re up to,” he “would emphasize two things most of all.”

“Firstly, as I said earlier, I think we’re in a good place,” he said. “So, I’m very comfortable with where we are. But I accept that there’s a load of uncertainty that’s around, which means we need to take a meeting-by-meeting approach.”

Asked whether his thinking had shifted with respect to comments he’d made a month ago, when he suggested that the ECB’s next rate move could just as easily be a cut as a hike, he said, “My thinking on that has not changed,” describing himself as “open-minded.”

However, he said, “I’m not going to make forecasts about where we’re going to be next year.”

Makhlouf minimized the significance of possible changes in ETS 2 implementation.

“At the moment, I think we’re in … a good place as far as our monetary policy is concerned,” he said in this context. “Our latest projections show us to be on track. I wouldn’t get too obsessed about what might or might not happen with ETS 2.”

The ECB’s meeting-by-meeting approach made sense under current uncertainty, he said. “But it would be a gross exaggeration to say I’m worried about the inflation trajectory,” he added.

ECB staff macroeconomic projections were “always important inputs into my thinking and, I’m pretty sure, everyone else’s thinking,” he said when asked about the importance of the December projection exercise. “But they’re just an input … There’s a whole bunch of other things that I think about first before I think about the projections.”

Makhlouf said he personally was in “in a relatively positive place as to how the European economy’s progressing,” even if there was “a lot more potential” to unlock.

In this regard, he urged spending “less time worrying about tariffs in the United States” in favor of “dismantling” internal market barriers.

Since June, trade-related uncertainty had eased somewhat, though uncertainty was still high, he said in prepared remarks. It was not yet clear what the impact of new trade agreements would be, or even whether they would endure in their current form, he said.

“Still, near-term global growth forecasts have improved modestly” since June, he said. “By contrast, risks stemming from developments in global financial markets have increased.”

Makhlouf said there was a “continued disconnect between elevated levels of economic uncertainty and stretched market valuations,” pointing to high stock prices and compressed corporate bond spreads.

“A negative development in the outlook for these companies could lead to a market correction,” he warned. “Given the significant exposure of global investors to US markets, this could in turn lead to a shift in broader risk sentiment and a repricing in other markets.”

Moreover, there were questions around non-bank lending standards, he said. Some corners of the NBFI sector could “amplify adverse market shocks, given they provide funding for banks, hold sovereign debt and are significant investors in global equity markets,” he said.

Finally, developed economies faced increased debt burdens, he cautioned.

“With markets charging low spreads on sovereign debt, a sudden shift in sentiment could lead to unplanned fiscal corrections and wider market disruption, given the centrality of government debt in the global financial system,” he said.