(Bloomberg) -- European Central Bank Governing Council member Madis Muller isn’t “totally” ruling out another interest-rate cut next month but reckons policymakers may lack sufficient data to make definitive judgments on the region’s struggling economy.
“It’s early to express a clear position on the interest-rate decision in October,” the Estonian official told Bloomberg on Tuesday in Tallinn. “It will be easier to decide in December because then we’ll again have a full picture with an updated outlook.”
The remarks are the first on monetary policy by an ECB official since data Monday showed a marked deterioration in the euro zone’s 20-nation economy. Many of Muller’s colleagues had said in recent days that a rate cut on Oct. 17 — an outcome that markets are now leaning toward — would require a significant downward shift in the growth outlook.
Muller said this week’s figures show that risks in the region are “clearly” to the downside.
“From the growth perspective, the latest news perhaps implies a weaker near-term outlook,” he said. “There’s a bigger probability that economic growth will be lower, not higher, than the expected number as outlined in the base-case scenario recently presented by the ECB.”
Inflation, meanwhile, has been retreating and is within sight of the 2% target. But there are lingering concerns about the services sector, where prices are rising at twice that pace.
“On the one hand wage growth has slowed, which implies that inflationary pressures could be lower looking ahead,” Muller said. “On the other hand, services inflation was very fast according to the latest data. I’d like to see that slow down further.”
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