ECB's Pierre Wunsch advocates maintaining stable monetary conditions in eurozone

In a Reuters interview, Belgian Central Bank Governor Pierre Wunsch suggested that eurozone inflation might remain below the European Central Bank's (ECB) target. He argued that the regulator should take a measured approach to rate cuts due to weak economic growth and inflation risks in the bloc.

The news agency reports that the ECB has reduced borrowing costs by two percentage points over the past year. The current 2% deposit rate is considered neutral, neither stimulating nor restraining economic growth.

Wunsch says reduced inflation risks in the eurozone, combined with disappointing GDP growth prospects, suggest ongoing monetary policy may be insufficient. Additionally, the euro's rise to 1.18 against the dollar, its highest level since late 2021, supports a cautious approach to monetary support.

The ECB forecasts that EU inflation will stay below 2% for 18 months, expecting it to reach the target level by early 2027. Reuters reports that another ECB rate cut is likely before year-end.