ECB’s Cipollone: If Upside Risks Do Not Materialize, “We Will Need to Act”

4 December 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Executive Board member Piero Cipollone said on Thursday that if upside risks fail to materialize, the ECB would need to cut interest rates.

In an interview with Nikkei, Cipollone said risks around the baseline scenario were now “more balanced,” and that the economy had shown resilience despite earlier concerns that it would perform worse than expected.

He noted that the ECB’s September projections anticipated inflation undershooting the target in 2026 and 2027, adding that “for us, it is key that we go back to target in the medium term.”

The next projection round, due in December, would extend the horizon to 2028, he noted. Cipollone said inflation risks “seem balanced” and the baseline scenario “seems more and more credible.”

Echoing comments from President Lagarde and other officials, Cipollone said that the ECB was “in a good place,” and that the central bank was prepared to act in the event of a shock.

Asked whether it was too soon to declare the easing cycle over, he replied that there were “still many risks in the pipeline.”

He said Europe had not yet seen the full impact of US tariffs, and noted pressure from Chinese imports being redirected from the United States to Europe.

“The financial boost coming from higher expenditure, especially in Germany, might not manifest itself with the intensity that we are expecting,” he said, adding that the assumption of a declining savings rate as consumption recovers still needed to be tested.

“If it doesn’t materialize, we will need to act,” he added.

Regarding the digital euro, Cipollone said the ECB was working under the assumption that legislation will be implemented in 2026, adding that he was “growing more confident by the day” that this will be the case.

Asked whether a €3,000 holding limit would be appropriate, he said the ECB would have to reassess the issue as the launch date approached but noted that a recent study suggested such a limit would not pose any financial-stability concerns.