Market Analysis

Euro zone inflation has not yet shown enough signs of drifting further in either direction to prompt a change in the European Central Bank's (ECB) outlook for future rate cuts, ECB board member José Luis Escrivá said in an interview with Spanish newspaper Expansión on Tuesday.

Escrivá, who also serves as the governor of the Bank of Spain, was asked about concerns raised prior to the October 17 rate cut, particularly the risk that inflation might face excessive downward pressure and fall below the ECB's 2% target.

"For now, the data indicates that we are generally on track to meet the inflation target as outlined in the September macroeconomic projections," Escrivá stated.

He further explained that the ECB’s latest projections account for risks that could push inflation slightly higher or lower than anticipated.

However, Escrivá noted that there are currently no signs of additional risks that would cause inflation to deviate further from the ECB's current outlook.

When questioned about the possibility of another interest rate cut in December or rates remaining unchanged, he emphasized that "everything will be evaluated and decided at that time," highlighting the need for a flexible, data-driven approach.

He also pointed out that estimates of the so-called neutral interest rate are highly uncertain and "of limited value" for guiding monetary policy.

Paraphrasing text from "Reuters" all rights reserved by the original author.