(Bloomberg) -- The European Central Bank will probably only be in a position to lower interest rates again at its final meeting of the year, according to Governing Council member Peter Kazimir.
“We will almost surely need to wait until December for a clearer picture before making our next move,” he said Monday in a statement. “I would require a significant shift, a powerful signal, concerning the outlook to consider backing another cut in October. But the fact is that very little new information is in the pipeline.”
The ECB reduced borrowing costs for the second time this year last week — lowering its key deposit rate to 3.5% as inflation nears 2% and concerns about economic growth rise. Some officials still see risks — especially in the services sector. President Christine Lagarde said there’s no fixed path for rates and the ECB will remain data-driven.
“Last week’s decision definitely doesn’t mean we’re on a path to cut rates every time we meet,” Kazimir said. “We stay open-minded, but from my perspective, there is still more risk that inflation will be higher over the medium term than we currently project.”
The ECB last week confirmed its inflation forecast and expects consumer-price growth to slow to its 2% target by the end of 2025.
“Inflation, especially in the services sector, is still persistent,” Kazimir said. “Our outlook relies on a significant slowdown next year, but this slowdown might not come.”
The Slovak central-bank chief also highlighted that the region’s economic “recovery has been disappointingly weak.”
“But let’s be clear — lowering rates isn’t a magic fix, as some may expect,” he said. “Yes, it will provide an impetus for the economy to an extent, but Europe’s economy has deeper challenges.”
Speaking separately, ECB Vice President Luis de Guindos said officials want to maintain “as much optionality as possible” given the level of uncertainty, and will be guided by incoming data.
“In the future we have been very clear — we don’t have any pre-determined path for rate reductions and we’re going to go meeting by meeting,” he said in Madrid. “Nobody on the Governing Council knows what’s going to happen in the coming months.”
(Updates with Guindos in last two paragraphs.)
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