ECB starting to debate if rates have to go below neutral, sources say
European Central Bank policymakers have begun to debate whether interest rates need to be lowered enough to start stimulating the economy, ending years of economic restriction, conversations this week with half a dozen sources indicate.
The ECB has been cutting rates quickly this year but policymakers have so far said the goal is a neutral setting, where the central bank is neither slowing nor stimulating growth in the hopes this will keep inflation stable.
While the sources, who spoke on condition of anonymity, stressed that any consensus was still long off, it marks a significant shift in the policy-making debate which could ultimately lead to the bank cutting rates sooner and by more than currently expected.
The shift comes as the economic fortunes of the bloc are deteriorating quickly and inflation is well below earlier predictions, raising the risk that price growth could undershoot the ECB’s target, much like it did for nearly a decade before the pandemic.
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https://www.rte.ie/news/business/2024/1023/1476952-european-central-banks-interest-rates/
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