MNI BRIEF: October Cut Seen As Insurance -ECB Accounts
MNI (ROME) - European Central Bank Governing Council members argued that October’s rate cut could “provide insurance against downside risks that could lead to an undershooting of the target further,” monetary policy accounts from the meeting showed on Thursday.
A few members initially expressed a view that they would have preferred to wait for more information until December but in general it was considered that “the risks from cutting at the present meeting and potentially being too early were lower than the risks of waiting and potentially acting too late”, the accounts showed.
During the meeting it was maintained that the weaker growth outlook primarily reflected structural rather than cyclical demand factors but that if the slowdown in economic activity and the downside surprise to inflation proved to be temporary the decision to cut in October could ex post “turn out as merely having brought forward a December cut."