- Association of German Banks on the ECB’s Governing Council Meeting: right to cut interest rates
- ECB not yet able to switch to ‘relaxation mode’
Heiner Herkenhoff, CEO of the Association of German Banks supports today’s announcement by the European Central Bank (ECB) that it will cut its deposit rate to 3.5 percent: “At 2.2 percent, inflation in the euro area was very nearly back to the ECB’s target level for the first time in three years.”
Nevertheless, European monetary guardians aren’t yet able to switch to ‘relaxation mode’, says Herkenhoff. “At 2.8 percent, core inflation, which reflects the longer-term inflation trend, is still well above the ECB’s stability target. And an inflation rate rise is expected towards the end of the year”, explained CEO Herkenhoff. The ECB has also highlighted this trend.
“Over the coming months, it will therefore be vital that the ECB displays the right sensitivity. This also includes dampening public expectations for a series of rapid interest rate cuts.”
