ECB's Interest Rate Adjustments: A Gradual Approach

Gabriel Makhlouf, a key member of the European Central Bank's (ECB) Governing Council and the Central Bank of Ireland's Governor, expressed his support for gradual interest rate reductions on Friday. Despite ongoing disinflation, Makhlouf emphasized that "some components of inflation" remain "too high," necessitating a cautious approach to rate cuts.

Makhlouf reinforced the ECB's dedication to achieving its inflation target of 2%. He stated, "Although we have not committed to a specific rate path, the direction of travel on interest rates is clear. The exact pace and number of further reductions hinge on inflation outcomes aligning with our projections and broader economic developments in the euro area."

This statement followed the ECB's decision to reduce all three of its key interest rates by another 25 basis points.