European Central Bank (ECB) policymakers appeared content with falling inflation when they met last month, but argued for gradual policy easing given lingering domestic price pressures, according to notes from their September 12 policy meeting published on Thursday.
The ECB cut interest rates last month and said it would be open in October, but a long list of policymakers have made the case for a follow-up move, suggesting that a cut next week is almost certain, and that the real debate will focus on December.
"The underlying path to 2% is highly dependent on lower wage growth as well as an acceleration of productivity growth to levels not seen for years and above historical averages," the ECB said in the note.
"Therefore, it is necessary to carefully monitor whether inflation will reach the target sustainably within the set time. The risk of a delay in reaching the ECB's target is seen as requiring cautious measures to avoid premature easing of policy," the ECB added.
The bank has already cut interest rates twice as inflation is now close to its 2% target, and noted that further easing is only a matter of time, given weak growth, declining price pressures, and slow wage growth.
The bank will meet again on October 17, and a rate cut is almost certainly on the cards, with the next move in December also expected.
