Inflation approaching 2% target ECB officials signal: interest rates are at appropriate levels

Member of the European Central Bank's Executive Board, Madis Mller, hinted that he currently has a relaxed attitude towards price pressures in the euro area, and shows little willingness to take further interest rate action. The Estonian central bank governor said on Friday in Vienna: "Both the market and our own expectations seem to indicate that in the foreseeable future, the inflation rate is likely to be close enough to 2%." He added that the monetary policy's "current stance is in line with the economic cycle and inflation outlook." However, he admitted that policymakers "must always remain vigilant - you never know what the future holds." Mller said: "In recent years, the global and European economies have experienced so many shocks that we had to abandon all previous macroeconomic forecasts." "We have successfully dealt with crises caused by pandemics and wars, all of which have affected prices and often triggered inflationary effects," he said. "So, if you ask me if there is any reason now to stay alert or vigilant, the answer is certainly yes." In this round of easing, the European Central Bank has cut interest rates by 200 basis points to 2%, but has kept rates unchanged at the last three policy meetings. Also present at the same event, Austrian central bank governor Martin Koch supported a cautious approach. "We always talk about staying vigilant, which may sound like a clich, but it is not empty rhetoric," he emphasized, pointing out the inflation and deflation effects that structural changes such as labor market and energy transition may bring. Koch said: "Therefore, now is the time to stay vigilant and observe the changes. In terms of monetary policy, our current situation seems to be good."