Slovakia's central bank governor Peter Kazimir said on Monday it was increasingly likely that eurozone inflation would return to target next year, but the European Central Bank (ECB) needed more evidence before declaring victory. .
Mr. Kasimir, an outspoken conservative, was one of the few policymakers this month to publicly express doubts about the need for a rate cut, but relented and ultimately supported what would be the third easing of policy measures this year. .
“If new data and forecasts confirm that the pace of disinflation is accelerating, we will be in a strong and comfortable position to continue the easing cycle,” Kazimir said in a blog post. said.
Kazimir also insisted that banks are waiting for further evidence and until then they need to be open-minded about December and keep all available options on the table.
“I am increasingly convinced that the path to eliminating inflation is on solid foundations,” Kazimir said.
“But the skeptical Thomas in me still needs to see further evidence of sustainable goal achievement.”
The market currently expects the central bank to cut interest rates at upcoming meetings until March or April next year, with deposit rates of 3.25% reaching 2% by the end of next year.
However, Kazimir also said that the long-awaited decline in wage growth and service inflation has not materialized yet, and that banks should wait for real evidence that this is happening before declaring victory. I warned you.
“If new information points to an upward trend in inflation, [risks]It is still possible to slow down the pace of lifting restrictions in future meetings,” Kazimir said.
“Our decision to cut interest rates in October leaves a huge possibility for the December meeting. All options remain on the table.”
In their speeches yesterday, Lithuania's Gediminas Simkus and Latvia's Martins Kazaks said borrowing costs would be further reduced if the downward trend in inflation continued.
“The direction is clear: we will ease monetary policy restrictions,” Simkus told reporters in Vilnius.
“We don't yet know what decisions will be made in December, but the direction is clear: down.”
Kazimir said that if new data and forecasts confirm the recent acceleration in disinflation, the central bank is in a “strong and comfortable” position to continue its easing cycle and remains “flexible and ready to act appropriately.” It's done,” he said.
However, we will need further evidence of slowing growth in service prices and wages before we can declare victory.
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