ECB Governing Council member Joachim Nagel stated today that the decision to cut interest rates yesterday was “logical” given the tendency for inflation to decrease. However, he emphasized that inflation remains “stubborn,” particularly in the services sector.
Nagel highlighted that negotiated wages are expected to rise sharply this year and continue strong growth thereafter. He noted, “We on the ECB Governing Council are not driving on autopilot when it comes to interest rate cuts.”
Council member Olli Rehn stated that inflation will continue to decline and interest rate cuts will support economic recovery. Rehn suggested that the possible scale of interest rate cuts over the next few years could range from 1 to 2 percentage points, assuming no new economic shocks occur.
Council member Gediminas Šimkus indicated that more than one rate cut might be necessary this year. He acknowledged that while data shows clear signs of disinflation, the path ahead will be challenging. Vice President Luis de Guindos added that inflation is expected to be around 2% next year but also noted “huge uncertainty in the economy.”
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