ECB’s Makhlouf: We should remain open-minded about rate path

ECB policymaker Gabriel Makhlouf said on Tuesday that the essence of data-dependency suggests that they should remain open-minded about the interest rate path, per Reuters.

“With disinflation well underway, we are confident in sustainably reaching our target of 2%,” Makhlouf added. These comments didn’t have any immediate or noticeable impact on the Euro’s performance against its major rivals. As of writing, the EUR/USD pair was virtually unchanged on the day at 1.0835.

Even while recent inflation data has indicated a positive downward trend, there will probably be obstacles in the way of reaching the 2% target. Regardless, structural elements like continued de-globalization and the energy shift ought to raise business expenses and eventually lead to inflation in consumer prices.

There is additional support for upside risks and higher inflation if the implications of an exceptionally tight labour market also materialise. This should make it more difficult for the ECB to implement the widely anticipated large interest rate drop.