Austrian ECB Governing Council member Robert Holzmann, one of the more hawkish voices, signaled that a 25bps cut is “probable” at the December meeting. While a larger, half-point cut isn’t “impossible”, it’s unlikely.

Holzmann emphasized caution, saying, “I’m still concerned that inflation might prove stronger than expected,” reflecting his hesitation in moving too quickly toward easing.

Despite acknowledging some downside risks, he remarked, “I don’t see enough of them to conclude that they dominate,” adding that the view of risks being tilted to the downside is still a minority on the ECB Governing Council.

Separately, Slovenia’s ECB Governing Council member Bostjan Vasle echoed the sentiment, expressing support for “going to neutral in measured steps.”

Vasle noted that while data has shown improvement, inflation “has not yet been defeated,” and discussions about undershooting the inflation target are premature. He further commented, “Once we get closer to neutral, it may be appropriate to align our language accordingly.”

At an event today, ECB President Christine Lagarde expressed contentment with the current inflation levels, stating that the central bank is “rather satisfied” as inflation has slowed to below the 2% target.

However, she emphasized that the central bank is keeping a close watch on economic growth, as it significantly influences inflationary trends. Lagarde pointed out, “We are attentive to growth because it impacts inflation. It’s different from the Fed,” highlighting a key difference in policy focus compared to Fed.

Separately, Chief Economist Philip Lane acknowledged that while “some of the recent data raised some questions about the recovery,” the overall outlook remains positive.

Lane affirmed that the narrative of a good economic recovery is still “very close to the baseline.” Lane highlighted “fundamental reasons” to expect a rebound in consumption and investment for the remainder of this year and into the next.

A growing debate is emerging among ECB policymakers about whether to accelerate the pace of rate cuts, with some members suggesting a potential 50 bps reduction in December. The possibility arises after inflation data in September came in significantly lower than expected, fueling discussions on the appropriate policy response.

Portuguese ECB Governing Council member Mario Centeno signaled openness to a larger cut, telling CNBC, “Certainly 50 basis points can be on the table because we continue to be data dependent and the data we are getting points in that direction.” He emphasized the surprising nature of the recent inflation figures, stating, “The truth is that the print of inflation in September was very low, way lower than what we were expecting.”

Echoing the possibility of a sizable rate reduction, Dutch ECB Governing Council member Klaas Knot acknowledged that a half-point interest rate cut could not be excluded at the December meeting. However, he cautioned that such a move would require further economic deterioration. “I would also say that I see the risks surrounding that baseline as reasonably contained,” Knot added, suggesting that while the option is on the table, it is not yet the central scenario.

On a more cautious note, Austrian ECB Governing Council member Robert Holzmann expressed skepticism about the need for a 50 bps cut under current conditions. Speaking to CNBC, Holzmann said, “I’m sure some of my colleagues will go for a big cut, others not. In my case, I will say I will look at the data.” He added, “If things really get as bad as some claim, we can have another 25, 50 I would say at the moment with the data, no.”

ECB Governing Council member Olli Rehn commented that disinflation process in the Eurozone is “well on track.” He acknowledged, however, that the economic growth outlook has “weakened quite clearly” over the past few months, which could “increase disinflationary pressures” moving forward.

Despite these developments, Rehn expressed that he is “not yet so concerned” about an undershoot in inflation, noting that both services inflation and wage inflation are still above the ECB’s 2% target. He added that the “danger of undershooting is not yet verified”.

Rehn also emphasized that the pace and extent of future rate cuts would depend on multiple factors, including “the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission.” This reflects the ECB’s continued data-dependent approach to future monetary policy decisions.

In a lecture delivered overnight, ECB Governing Council member Francois Villeroy de Galhau stressed the importance of maintaining “agile pragmatism” in adjusting the current restrictive monetary policy.

He emphasized that the risk of reducing the ECB’s restrictive stance too late “could indeed become more significant” to the risks of acting prematurely.

Villeroy noted the “risk that inflation undershoots, especially if growth remains subpar”.

He further added, “If we are next year sustainably at 2% inflation, and with still a sluggish growth outlook in Europe, there won’t be any reasons for our monetary policy to remain restrictive, and for our rates to be above the neutral rate of interest.”

At a Bloomberg Newsmaker event, ECB President Christine Lagarde expressed that she was “absolutely confident” that inflation would sustainably return to 2% by 2025. When asked if this target could be reached earlier than ECB’s current projection of late 2025, Lagarde replied, “That would be my hope.”

Despite this optimism, Lagarde emphasized the need for caution, signaling that ECB is not yet ready to declare victory over inflation. She made clear that the future path for monetary policy was dependent on incoming data and that while the direction of policy easing was apparent, the pace of further rate cuts would be data-dependent.

On the question of the neutral rate—the level of interest rates that neither stimulates nor restrains the economy—Lagarde was hesitant to provide specifics, noting that while the neutral rate is likely higher than in recent years, it remains below the current 3.25% deposit rate, which she described as still restrictive.

“If you were to ask me today, ‘Where is it?’, the honest answer is, I don’t know,” she admitted.

ECB Governing Council member Joachim Nagel spoke today, firmly opposing the introduction of dot plots for the Eurosystem, a tool used by Fed to project individual policymakers’ rate forecasts.

Nagel argued that such projections could lead to undue pressure on national governors to prioritize their domestic agendas over the broader interests of the 20-nation eurozone.

“This could potentially influence the Governing Council’s independence,” Nagel warned.

Instead of adopting this approach, Nagel suggested that ECB refine its existing communication strategies. “We should enhance the communication of our existing measures of uncertainty,” he said.

Nagel advocated for the development of new tools such as scenario and sensitivity analyses, as well as improved fan charts, to provide clearer guidance without compromising the Governing Council’s autonomy.

ECB Governing Council member Mario Centeno spoke at an event today, advocating for a measured and consistent approach to reducing interest rates. Centeno emphasized the need for a “gradual, steady, and predictable reduction in interest rates” to their neutral level, which he estimated to be “maybe 2% or slightly lower.”

Centeno highlighted that inflation in the Eurozone has slowed significantly and is now converging toward ECB’s 2% target. However, he expressed concern that the risk could shift to undershooting the target as inflationary pressures ease.