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ECB: January Rate Cut “Done Deal” For ECB’s Kazimir

ECB
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Slovakia’s ECB Governing Council member Kazimir believes that there will be another rate cut at the central bank’s January 30 meeting followed by another two or three back-to-back moves given the data. However, the high level of uncertainty means that the ECB will need to remain flexible. It began easing in June last year and has cut 100bp this cycle. 

  • Kazimir said that “Three or four cuts in a row are feasible, but at the same time, I must say that we cannot swear to it”. January “for me personally, the deal is done”, which is consistent with comments from other ECB members, according to Bloomberg.
  • The OIS market has a 25bp cut for next week almost fully priced in.
  • The ECB will have to continue to weigh up inflation risks, especially from the weaker euro and global developments, with persistent weak growth, especially in Germany. In this regard Kazimir said “what we need above all is balance between acting too cautiously and too aggressively”, but the central bank is on the “right track” to achieve its 2% inflation target. In December it forecast 2.1% for 2025.
  • He said that the neutral rate is between 2% and 3%, but probably closer to 2%.
  • Kazimir was concerned about the impact US President Trump’s policies will have on Europe’s competitiveness, which is already a problem.
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Slovakia’s ECB Governing Council member Kazimir believes that there will be another rate cut at the central bank’s January 30 meeting followed by another two or three back-to-back moves given the data. However, the high level of uncertainty means that the ECB will need to remain flexible. It began easing in June last year and has cut 100bp this cycle. 

  • Kazimir said that “Three or four cuts in a row are feasible, but at the same time, I must say that we cannot swear to it”. January “for me personally, the deal is done”, which is consistent with comments from other ECB members, according to Bloomberg.
  • The OIS market has a 25bp cut for next week almost fully priced in.
  • The ECB will have to continue to weigh up inflation risks, especially from the weaker euro and global developments, with persistent weak growth, especially in Germany. In this regard Kazimir said “what we need above all is balance between acting too cautiously and too aggressively”, but the central bank is on the “right track” to achieve its 2% inflation target. In December it forecast 2.1% for 2025.
  • He said that the neutral rate is between 2% and 3%, but probably closer to 2%.
  • Kazimir was concerned about the impact US President Trump’s policies will have on Europe’s competitiveness, which is already a problem.