(Bloomberg) -- The European Central Bank should keep lowering borrowing costs at the current pace as inflation is increasingly under control, according to Governing Council member Gediminas Simkus.
The downward direction for monetary policy is clear, the Lithuanian official said Thursday. While price risks for 2025 look balanced, there could be downside dangers ahead in 2026, he warned.
“Speaking of decisions in the future, they’ll be dictated by data available at the time,” Simkus told reporters in Vilnius. “But the best scenario would be a rhythmic, consistent pace downward toward the neutral rate.”
ECB policymakers are weighing how much and how quickly to decrease borrowing costs after four cuts this year. With uncertainty elevated due to geopolitical tensions and Donald Trump’s return to the White House, most are inclined to maintain quarter-point reductions. Analysts predict four moves, bringing the deposit rate to 2% from 3% now.
Investors envisage a slightly more aggressive path, ending at 1.75%. Simkus said that would be toward the bottom of the 1.7%-2.5% range where many see neutral — an unobservable level that neither stimulates nor constricts economic activity.
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