The European Central Bank (ECB) is likely to hit its 2% inflation target in the coming months, but overall economic conditions are still too uncertain for the bank to provide any meaningful guidance on its next policy move, ECB policymaker Peter Kazimir said.
The ECB cut interest rates for the seventh time this year on Thursday but gave little indication of future moves, despite warning that uncertain US trade policy could weigh on growth and increase economic uncertainty.
“Inflation is now getting closer to the target, and I am confident that we will reach it in the coming months,” Kazimir, who is also the Governor of the Central Bank of Slovakia, said in a blog post.
The ECB had previously forecast that inflation would only reach 2% in early 2026, so Kazimir’s comments suggest that the pace of price increases could come more quickly than previously expected.
Kazimir also noted that the ECB’s deposit rate is now at 2.25%, and with the rate cut, it is no longer a drag on economic growth, and can be considered close to a neutral policy.
He cautioned, however, against making predictions about future policy too quickly due to risks and “changing circumstances”.
“We are operating in a very fast-changing environment,” Kazimir said. “Uncertainty dominates the economic landscape.”
“The rising global trade tensions, particularly those stemming from the US tariff policy, have created significant uncertainty in the system and undermined confidence,” he added.
Markets are still expecting at least two more rate cuts this year and see a 50% chance of a third cut, meaning the deposit rate could end up in a range of 1.50% to 1.75% by the end of 2025.
