In an MNI interview, ECB Executive Board Member Frank Elderson responded to the speculation on whether interest rates have reached their pea. He noted, “Does that mean policy rates have peaked? Not necessarily. There is still a lot of uncertainty.”
Elderson emphasized the efficacy of the decisions taken by ECB, remarking, “we consider that, with the decisions we’ve made and on the basis of our current assessment, the current interest rate levels will make a substantial contribution to us reaching our inflation target in the medium term.”
Refraining from speculation, he underscored the bank’s methodical approach: “we take these decisions meeting by meeting, on a data-dependent basis. Making any predictions about what we will do next would not be consistent with that approach.”
Highlighting the challenges in the euro area’s economic performance, Elderson revealed, “What we’re seeing is a more protracted period of sluggish growth than we were expecting.” He pointed out several contributing factors to this slowdown, including “lower demand for euro area exports, the impact of tighter financing conditions, lower residential and business investment, and the weakening services sector.”
Yet, not all indicators spell caution. Offering a balanced view, Elderson noted the resilience in certain sectors. “On the other hand, labour markets are still strong and disposable income is expected to rise, which would have a stabilising effect on overall GDP growth.”
