Pierre Wunsch, a member of the European Central Bank’s (ECB) 26-member Governing Council and the Belgian central bank chief, has suggested that borrowing costs may have reached their peak, indicating lower chances of future interest rate hikes unless there’s another surge in energy prices. This announcement was made during an International Monetary Fund (IMF) report presentation in Brussels.
Wunsch predicted a “soft landing” for the economy and lauded the effectiveness of monetary tightening. The deposit rate in the euro region was held steady at 4% last month, marking the first such decision since the mid-2022 tightening cycle began.
In his comments, Wunsch also warned against expecting a 2% rate by 2025 prematurely. He underscored the growth risks as “tilted to the downside”, with price risks leaning towards high inflation. He also pointed out the current state of the euro zone as a weak form of stagflation.
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