European Central Bank Executive Director Boris Vujcic reiterated that monetary policy is "in good shape," but market risks need to be monitored.

Member of the European Central Bank Governing Council, Boris Vujcic, reiterated at an event in Miami that the current monetary policy is "in good shape" and emphasized that after lowering inflation rates to the ECB's target level without causing an economic recession, "we feel that we have completed our work." This statement from the Croatian official came after the ECB's currency policy meeting last Thursday - on that day, the bank kept interest rates unchanged as expected, believing that the existing monetary policy framework is sufficient to control prices without putting excessive pressure on the economy. Specifically, the European Central Bank has kept the key deposit rate unchanged at 2% for three consecutive times, with the last rate cut occurring in June 2025. This round of rate cuts began in June 2024, starting from a historical high of 4% for the deposit rate, and by June 2025 had experienced eight rate cuts, totaling a decrease of 2 percentage points, finally reaching the current level of 2%. This adjustment coincides with the Eurozone inflation rate touching the 2% target range and is in line with current economic data - GDP growth in the third quarter exceeded expectations, and the inflation rate remained close to the medium-term target level, leading analysts and investors to generally predict that the deposit rate will be maintained in the short term. The European Central Bank stated in its announcement last Thursday: "The inflation rate is still close to the 2% medium-term target, and the Governing Council's assessment of the inflation outlook remains broadly unchanged." At the same time, it pointed out that despite ongoing global challenges, the Eurozone economy continues to show resilience, thanks to a strong labor market, robust balance sheets in the private sector, and the cumulative effects of previous rate cuts. However, the statement also warned of uncertainties in the outlook, especially the risks posed by ongoing global trade disputes and geopolitical tensions. The last policy meeting of the year in December will release updated quarterly forecasts, by which time the market may have a clearer view of the future direction of inflation. Some officials are concerned that the forecast results may show that inflation will be lower than expected over the next three years, but Vujcic also pointed out the real risks facing the economy: fiscal discipline issues in Eurozone member countries, signs of overvalued financial market valuations, and the retail funds performing consistently better than hedge funds, which is a "usually indicative of unfavorable conditions" signal. He particularly emphasized: "Such performance differences often indicate underlying risks and require vigilance." It is worth mentioning that Jens Weidmann, member of the ECB Governing Council and President of the Bundesbank, also stated on November 3 (Monday) that Eurozone economic data was basically in line with the ECB's September outlook, but policymakers still need to "keep all options open." He emphasized that there is "absolutely no reason" to adjust borrowing costs while the ECB maintained the deposit rate at 2% for the third consecutive time last week, and said, "Since the latest economic forecasts were released in September, there has been no fundamental change in the data. In December, we will make decisions based on new forecasts and data, and in the face of many uncertainties, keeping all options open is the most appropriate approach." Slight rise in inflation cannot hide economic heat Euro Zone October PMI hits 29-month high Although Eurozone inflation slightly rose to 2.2% in September from 2.0% in August, this change was mainly driven by a one-way increase in service prices and did not lead to overall inflationary pressures. Therefore, economists generally believe that the ECB will maintain a cautious stance on adjusting interest rates in the short term - to avoid excessive stimulation leading to uncontrolled inflation, and to prevent premature tightening that could suppress economic recovery. Behind this judgment are the "structural characteristics" reflected in inflation data: while there is an increase in service prices, other areas such as manufacturing have stable prices, keeping overall inflation within a manageable range. Of note is the final October PMI data for the Eurozone released on November 5 by SPGI, which outlined a more positive picture from the perspective of economic activity: the HCOB Eurozone composite PMI compiled by S&P Global rose from 51.2 in September to 52.5, not only achieving expansion for the 10th consecutive month, but also reaching a 29-month high, with the services PMI final value at 53, significantly higher than market expectations. This data combination sends a clear signal - the Eurozone economy is expanding at its fastest pace since May 2023, completely breaking free from the sluggish growth pattern earlier in the year. This growth is driven by a comprehensive acceleration in service sector activity and a significant improvement in demand conditions, while the manufacturing sector remains stable. Furthermore, overall employment growth accelerated to the highest level in 16 months, reversing the slight decline trend in September, as service sector enterprises increase hiring to meet growing demand, despite the manufacturing sector continuing to lay off workers at a faster pace. Price trends show differentiation, with overall input cost inflation falling to the lowest level in three months, while the speed of sales price increases by companies reached the highest level in seven months.