ECB Stresses Flexibility on Rates Despite Inflation Progress
Jose Luis Escriva, Spain’s central bank governor and member of the European Central Bank’s Governing Council, is urging caution at a moment when eurozone inflation appears largely tamed.
Addressing students at Madrid’s CUNEF University, he argued that monetary policy must remain flexible, with rate decisions ready to move in either direction depending on how the economy evolves.
The ECB has already delivered an unusually aggressive round of easing, cutting rates eight times in a year. At 2%, the benchmark is now considered “reasonable,” according to Escriva, reflecting the success of the bloc’s disinflation campaign.
He noted that just a few years ago inflation pressures looked far more daunting, while today consumer prices are hovering near the 2% target.
Even so, he cautioned against assuming the job is done. External risks remain, from slowing global growth to geopolitical tensions, and he characterized the outlook for eurozone activity as balanced but leaning slightly negative.
With Brussels recently sealing a trade deal with Washington, visibility for growth has improved — but not enough to eliminate uncertainty.
Escriva’s comments underscore the ECB’s balancing act: claiming progress in the inflation fight while refusing to rule out further action. For now, policymakers appear content to hold steady, but the door remains open if circumstances shift.
Source: Bloomberg
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