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The European Central Bank should be able to continue easing monetary policy, but it must take into account rising consumer prices, said Pierre Wunsch, a member of the European Central Bank’s Governing Council and governor of the Belgian central bank.
“According to our baseline scenario, if our expectations are met, we should be able to cut interest rates further,” Wunsch said in a television interview with Belgium’s VRT channel on Sunday, according to Bloomberg News Agency on Sunday.
“But I see little risk that this will happen more slowly if service sector inflation remains elevated,” he added.
Wunsch’s comments came three days after the European Central Bank cut interest rates for a second time, with bank president Christine Lagarde indicating that another cut was likely in December – not at the next meeting in October.
Consumer price increases “seem to be more or less under control, but service inflation – inflation without goods and energy – remains very high, at around 4%,” said Wunsch, the governor of the Belgian central bank.
“So it’s not that easy, and if the recovery is coming, and we hope it is, then it’s very likely that inflation will stay above 2% for a longer period,” he added.
