ECB’s Vujčić Sees No Case for Further Rate Cuts, Warns of AI-Bubble Risks

25 November 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Boris Vujčić said in an interview published Tuesday that he currently sees no reason for another interest rate cut, while cautioning that a sharp correction in an AI-driven market boom could change the outlook.

Vujčić, who heads the Croatian National Bank, told German business daily Börsen-Zeitung that inflation had been brought “from double-digit level to around 2% without creating a recession in the Eurozone,” he said. For the moment, the ECB is “in a good place that we hopefully will stay as long as possible,” he said.

He reiterated that he has no preset conditions for further easing or tightening. “I don't have a special scenario in mind for a rate cut or a rate hike. Everything is circumstantial,” he said.

Inflation and growth risks appear balanced, he said, noting that growth had exceeded expectations and expressing anticipation of “healthy growth” in 2026.

In his view, “we are still good at forecasting inflation,” with wage projections particularly reliable. “Wage pressure should continue to be moderate, which should lead to an inflation in the Eurozone around our target,” he said.

The ECB should avoid reacting to minor or temporary deviations from the 2% inflation target, he argued. “We should not try to micromanage inflation,” he said. “If we don't see persistent pressure for inflation to come up or down, we should not change interest rates.”

Vujčić also downplayed the implications of coming projections. “If you don't see large enough persistent deviation or an increasing downward trend, then it is fine,” he said.

“Thinking two or three years ahead, you always have increasing uncertainty,” he continued. “We better stick to the more visible future and make sure that the data we get is consistent with our projections. If they are, we are fine.”

Possible changes to the timing of the EU’s ETS2 scheme would likewise not warrant overreaction, he said. “If not too large, this is an example of something that has a one-time effect on inflation,” he argued. “If it is not too large and therefore does not propagate into further price increases, I think we should not make too much out it.”

He warned that a sharp reversal in AI-related equity valuations could have macroeconomic consequences. “If there are disappointments in the benefits and revenues of AI, the evaluations at the stock markets could quickly reverse,” he said.

A bursting bubble could weaken growth if households incur losses and cut spending, creating both financial stability concerns and “an issue for monetary policy,” he said.

Asked about speculation that he might seek the ECB Vice Presidency next year, Vujčić noted that the process would begin soon. “I am certainly a central banker in and out, in all aspects of central banking, and I want to stay the central banker in one way or the other,” he said.

He observed that no country from Central and Eastern Europe had ever held a seat on the ECB Executive Board. After Bulgaria joins the euro area on 1 January 2026, “a third of the euro area members are from central East Europe,” he said.

On Croatia’s euro introduction in 2023, Vujčić described a demanding multi-year process that included entry into close cooperation with the ECB’s Banking Supervision. A particular challenge was passing the Maastricht inflation criterion during the sharp price surge of 2022. Although most Croatians still link the euro changeover to high inflation, studies show the effect was only “between 0.2 and 0.4 percentage points,” he said.

He said the euro has brought clear economic benefits by eliminating exchange-rate risk, lowering interest rates and supporting tourism. Croatia’s earlier exchange-rate peg meant it had no practical monetary-policy autonomy to lose when joining the eurozone, he added.

Divergences in national inflation rates are expected, he said, though Croatia’s faster growth and higher wages have contributed to higher recent inflation. Over the long run, however, Croatia’s cycle is closely aligned with that of the euro area, making the common monetary policy “long run beneficial for all.”

He argued that the ECB’s policy stance is not inherently biased toward large economies, saying what matters is how closely a country’s cycle is aligned with that of the currency bloc.