(Bloomberg) -- Market bets on two more European Central Bank interest-rate reductions this year aren’t “entirely misplaced,” but shouldn’t be taken as “a given or a baseline scenario,” according to Governing Council member Peter Kazimir.
“We are on track to return to our target, but we are clearly not there yet,” the Slovak central bank governor said in an op-ed Monday, referring to consumer prices. “Due to various factors, both domestic and global, there is still a non-negligible risk of inflationary pressures re-emerging.”
Kazimir spoke after the ECB last week after decided to keep borrowing costs on hold, with President Christine Lagarde saying the next policy gathering — on Sept. 11-12 — is “wide open.”
Still, with inflation pressures still lingering, policymakers are becoming less confident that a path for two further reductions is realistic this year, and don’t want investors to assume that a cut at the next gathering is a done deal, people familiar with the matter told Bloomberg.
“There is no need to rush our decisions,” Kazimir said, echoing comments from his Irish counterpart — Gabriel Makhlouf— over the weekend. “Enjoy the summer lull and wait for the much-anticipated September ‘health check.’ The upcoming data, combined with fresh forecasts, will set the stage for any necessary decisions.”
©2024 Bloomberg L.P.
