ECB Sees Inflation Job Almost Done Despite Tariff Mess

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Francois Villeroy de Galhau, Governing Council member from France:

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“There is currently no inflationary risk in Europe, and we can now almost say ‘mission accomplished’ when it comes to bringing inflation back to our 2% target. The significant deceleration of wages is another proof thereof.”  

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“It is therefore both fair and appropriate that, compared to the Federal Reserve or the Bank of England, the ECB has started cutting rates earlier, faster, and likely further this year.”

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Klaas Knot, Governing Council member from the Netherlands

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“A policy rate that is neither accommodative nor restrictive broadly remains the place to be.” 

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“We will keep a medium-term focus, and aim to set policy in a manner that will result in inflation around the 2% target sustainably and with sufficient confidence not just in the baseline, but in a range of scenarios.”

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Olli Rehn, Governing Council member from Finland:

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“If in June inflation is projected to fall below our 2% inflation target over the medium term, then the right reaction is to cut rates further.” But even if that’s not the case, there are few good arguments to take a break. “We also have to look at the growth outlook and financial conditions.” The latter have tightened because of trade uncertainty, while economic risks “have broadly materialized.”

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“It’s really important that we maintain full freedom of action, implying that we don’t define certain thresholds because of an assumed neutral rate, and we don’t a priori rule out a certain size of rate cut either. This is a time for agile and active monetary policy.”

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Robert Holzmann, Governing Council member from Austria:

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The lack of clarity over the situation means the ECB’s next interest-rate decisions are “completely open” — “we don’t know where we’ll end up.” 

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“But I agree with President Christine Lagarde that so far, the net impact from the US tariff announcements seems to be rather deflationary than inflationary.”

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Peter Kazimir, Governing Council member from Slovakia:

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“Inflation is approaching its target, and I’m confident that we’ll reach it within the next few months. However, we remain cautious. We must, particularly under today’s volatile and often chaotic conditions. We must remain vigilant and agile.”

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Martins Kazaks, Governing Council member from Latvia:

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“We’ve done everything to fulfill our mandate, to ensure 2% inflation medium term,” he said. “We are very close to it.”

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Market wagers for the European Central Bank to lower interest rates two more times look reasonable, Governing Council member Martins Kazaks told CNBC.