ECB's Vujcic sees need for caution in further interest rate changes

According to Boris Vujcic, a member of the Governing Council of the European Central Bank (ECB), the regulator should not perceive the temporary drop in inflation in Europe below the 2% target as something too serious. The ECB mustn’t hurry with further interest rate changing. The official stated this in an interview with Handelsblatt.

The central bank estimates that the region's consumer price growth rate will remain below target for the next 18 months before returning to 2% in 2027. Some of Vujcic's colleagues, including Olli Rehn of the Bank of Finland and French regulator head Francois Villeroy de Galhau, have expressed concern about inflation slowing too much for too long.

However, Vujcic, known for his hawkish stance, sees the current environment as a chance for the ECB to assess the situation. Further actions of the regulator will be based on incoming economic data on the eurozone.

Vujcic emphasized that before the September meeting the ECB will get new statistics on inflation for July and August, GDP for the second quarter, and other important indicators. This will help the regulator to determine the further course of its monetary policy.