European Central Bank (ECB) Executive Board member Piero Cipollone has reaffirmed the ECB’s view that inflation risks in the eurozone remain balanced, despite rising global trade tensions and fluctuating energy prices. His comments, published Saturday in an interview with Slovenian daily Delo, come just two days after the ECB left interest rates unchanged and signaled a more cautious outlook.
Cipollone said the central bank’s latest assessment in June still holds, noting that recent developments, such as a mild appreciation of the euro and slight increases in energy costs, effectively cancel each other out in terms of inflationary impact.
“We now see an additional appreciation of the euro and a slight increase in energy costs,” Cipollone told Delo. “The overall assessment therefore stays the same.”
His remarks come amid ongoing debate within the ECB Governing Council over the inflation trajectory. While some policymakers have argued that inflation may fall below target in the months ahead, Cipollone emphasized that the broader consensus within the Council had not shifted.
“The June assessment can be confirmed, and inflation expectations are balanced,” he said, also highlighting the resilience of the global economy despite rising trade tensions.
At its monetary policy meeting on Thursday, the ECB held its key interest rate steady at 2%, having already halved it from 4% since June 2024. While the central bank acknowledged increased uncertainty in the inflation outlook, it adopted a moderately optimistic tone, suggesting that further rate cuts are unlikely in the near term.
Markets reacted cautiously, with current pricing indicating about a 50% chance of another rate cut before the end of 2025. Some economists believe the ECB may have already reached the end of its current easing cycle, especially if inflation remains within target and growth stays resilient.
Cipollone’s comments are likely to reinforce the view that the ECB is moving into a wait-and-see phase, closely watching incoming data before making any further moves. For now, the central bank appears confident that inflation pressures are neither accelerating nor declining rapidly, keeping the policy stance finely balanced amid evolving global conditions.
Written By Rodney Mbua
