MNI BRIEF: ECB September Projections Still Valid - BOS Escriva
MNI (ROME) - The base case outlined in the European Central Bank’s September projections remains the most likely scenario, with inflation set to return to 2% by 2025 and medium-term interest rates expected to be lower than current levels but still higher than before the pandemic, Bank of Spain Governor Jose Luis Escriva said on Tuesday.
“What the data is currently pointing out is that we are getting closer to the inflation target, broadly following the path foreseen in the September macroeconomic projections,” Escriva said in an interview with the Spanish daily 'Expansion', adding that once inflation reaches 2% it will stabilise at that level.
Escriva justified the October rate cut by the fact that inflation is converging towards 2% and some risks to growth have intensified, though he still views risks as balanced, as in September. When asked about the neutral rate, he noted that estimates are not yet robust enough, which is why “they are not a central piece of reflection in monetary policy discussions.” (see MNI SOURCES: ECB Officials See Rate Expectations As Stretched )