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.”
