(Bloomberg) -- European Central Bank interest rates will fall, but the speed and pace will depend on data, according to Governing Council member Gabriel Makhlouf.
“It is clear that policy remains restrictive and, shocks aside, rates are on a downward trajectory,” the Irish central banker said. “Given the volatility and the data and the substantial uncertainty regarding economic policy in trade partners, I remain open-minded on slope of this downward trajectory.”
Makhlouf’s comments are in line with previous remarks and reflect the ECB’s data-dependent approach. Officials have already cut rates three times since June, and are expected to do so again next month.
Speaking on Monday at the Society of Professional Economists in London, Makhlouf also said:
- “Recent data make me increasingly confident of reaching our 2% inflation target during 2025, but the stickiness of services inflation and elevated wage growth leave some room for caution”
- “Services inflation has averaged around 4% this year in the euro area. With goods inflation around its long-term average of 0.5-1%, I want to see services inflation closer to 3% in order to be more in-line with our target”
- “In support of this, there are some signs of labor market loosening, which will help to ease upward wage pressures. Forward-looking surveys and wage trackers also point to a slowing of wage growth next year”
- “Measures of economic activity have been volatile. Third-quarter GDP was toward the top-end of the range in our September projections. Against this, the November PMI was weak, along with data on new orders. Weaker growth is a downside risk to inflation, and we will know more after the updated Eurosystem staff projections in December”
--With assistance from Jennifer Duggan and Philip Aldrick.
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