French ECB Governing Council member François Villeroy de Galhau, speaking at a conference today, emphasized a cautious and pragmatic stance on monetary policy, downplaying the significance of recent stronger-than-expected wage data.

He described the Q3 surge in negotiated wages as a “backward-looking” indicator, primarily reflecting the “lagged effects” of earlier negotiations in Germany, which were already factored into the ECB’s September projections.

Villeroy highlighted a shift in risks, stating that the balance for both growth and inflation now tilts to the downside. He also noted that potential US tariffs are “not expected to alter significantly the inflation outlook in Europe”.

Against this backdrop, Villeroy reaffirmed the ECB’s commitment to “continue to reduce the degree of monetary policy restriction,” while underscoring that the pace must be guided by “agile pragmatism” and “full optionality” in future decisions.

Greek ECB Governing Council member Yannis Stournaras emphasized at an event overnight that inflation in Eurozone is now projected to reach the 2% target “sooner than earlier expectations,” likely by early 2025 rather than the fourth quarter as previously anticipated. This shift suggests the ECB’s policy focus may increasingly pivot to ensuring “we don’t undershoot our inflation objective”.

Stournaras highlighted markets are “extremely sensitive” to disappointing growth readings. He warned, “If negative surprises for growth come in and we fail to unwind our restrictive monetary-policy stance at the appropriate pace, unnecessary market turbulence could be induced.”

While he acknowledged that the September inflation reading of 1.7% marked a success in controlling price pressures, he cautioned it should also serve as a “wake-up call.” Prolonged monetary restrictions, he warned, could risk “undershooting of our inflation target over the medium term and impede growth”.

Italian ECB Governing Council member Fabio Panetta emphasized today that restrictive monetary policies are “no longer necessary”, given inflation’s proximity to the target and sluggish domestic demand.

Panetta noted, “In the current phase, we should focus more on the sluggishness of the real economy,” highlighting the risk that a lack of recovery could drive inflation well below target, creating challenges for monetary policy to counteract.

He advocated for normalizing the ECB’s stance and moving toward a neutral or even “expansionary territory” if necessary, stressing, “We are probably a long way from the neutral rate.” Panetta also reminded that lowering rates below neutral at the bottom of a cycle aligns with standard policy frameworks historically followed by both ECB and Fed.

Separately, Estonian ECB Governing Council member Madis Muller shared that, “I wouldn’t ever want to say anything is a done deal,” but he expressed confidence that “we can again reduce interest rates in December.”

Greek ECB Governing Council member Yannis Stournaras told Bloomberg today that a 25 bps rate cut at the upcoming December meeting would represent “an optimal reduction”.

He acknowledged that interest rates remain firmly in restrictive territory, emphasizing that even with continued cuts to reach the neutral rate, “it’s still a long way to go,” indicating multiple reductions are likely ahead.

Stournaras also highlighted the optimistic revision in inflation expectations. “The baseline is that now, inflation falls more rapidly than we thought in our September forecasts,” he noted, adding that ECB could meet its 2% inflation target on a sustainable basis by early to mid-2025 rather than by the end of the year.

Irish ECB Governing Council member Gabriel Makhlouf signaled caution today, emphasizing that an interest rate cut at the December 12 meeting is not guaranteed.

“It would be going a bit far to say an ECB interest rate cut next month is ‘in the bag,’” he stated, adding that the evidence s would need to be “pretty overwhelming” for a more aggressive 50bps reduction.

Makhlouf also addressed the uncertainty surrounding the impact of US President-elect Donald Trump’s administration on inflation dynamics. He stressed that it would be “premature” to base monetary policy decisions on assumptions about Trump’s fiscal and trade policies, stating, “I do think it would be premature to come to conclusions as to exactly what it is that the new US administration is going to do.”