ECB Starts to Discuss If Rates Need to Go Below Neutral: Reuters

By Alexander Weber

October 23, 2024 at 3:11AM EDT

A train crosses a railway bridge over the River Main near the European Central Bank (ECB) headquarters in Frankfurt, Germany, on Monday, May 23, 2022. While ECB policy makers have increasingly coalesced around the prospect of a first hike at their July 21 meeting in recent weeks, they have barely mentioned the possibility of a more aggressive half-point move such as the US Federal Reserve delivered this month. Photographer: Alex Kraus/Bloomberg (Alex Kraus/Bloomberg)

(Bloomberg) -- European Central Bank officials are starting to debate whether interest rates will need to be lowered to a level that stimulates economic activity, Reuters reported, citing people it didn’t identify.

While any consensus is still some way off, the report said that a small but growing group considers that the ECB has fallen behind the curve on monetary easing, meaning deeper cuts will be required to prevent inflation from settling below 2%.

They’d also like the ECB to drop a reference to “restrictive” rates in the statement that’s published following policy decisions — to show it’s taking downside risks seriously, Reuters said. An ECB spokesman declined to comment, it said.

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--With assistance from James Hirai.