In a panel discussion held in Skopje today, opinions about the future of interest rates and inflation were aired by two members of ECB’s Governing Council.

Bostjan Vasle suggested that the series of interest rate hikes might have come to an end, citing a possible easing of inflation. Boris Vujcic, on the other hand, shared a more cautious perspective, highlighting potential challenges in attaining the 2% inflation target.

Vasle, Slovenia’s central bank head, was quoted saying, “It’s probably the case that we are done with interest-rate increases.” He noted that current economic indicators appear favorable, with preliminary signs of inflation tapering off.

However, Vasle also pointed out the prevailing uncertainties, stating, “We are seeing some signs of inflation going down, also some first signs of sustainability of this trends, but on the other hand, there are still many uncertainties.”

Croatian central bank chief Vujcic, acknowledged the downward movement towards the 2% goal but pointed out the statistical effects that may be influencing these figures. His words served as a reminder of the monetary policy challenges that could arise if the disinflation process stalls before reaching the target.

“You might get into a situation where the inflation rate — the disinflation process — stops at a level, which is not your target,” Vujcic expressed. “Then it’s challenging for monetary policy, because it has to do something more to bring it all the way down to 2%.”

ECB Chief Economist Philip Lane, in a discussion with Spanish RTVE, described the disinflation progress as “very good.” He added that “the next move is to cut interesting rate”.

Nevertheless, the timing of such rate adjustments would be data-dependent. Also, “the number of rate cuts we make will depend on how much progress we make towards our target,” he added.

In the background, there’s a growing consensus around the first rate cut in the current cycle, with expectations leaning towards April or June as likely windows for action.

In the post meeting press conference, ECB President Christine Lagarde said incoming data since last meeting were in line with the baseline scenario of “ongoing, but moderate, growth” of the economy. Weakness in manufacturing sector remains a “drag” on momentum. But employment and wages growth continue to “support the resilience” of the economy. Inflation remains “subdued overall” but there were signs of moderate increase in underlying inflation.

Lagarde also repeated that “risks surrounding the euro area growth outlook, related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets, remain tilted to the downside”. But risks were “less pronounced as some of the uncertainty surrounding international trade is receding.”

Headline inflation is “likely to hover around current levels” in the coming months. Inflation expectations have stabilized or ticked up slightly. Underlying inflation remained generally muted by there were indications of a moderate increase. weaker growth momentum is “delaying” pass-through of labor cost pressures to inflation.

Lagarde’s press conference here.