Senior European Central Bank officials diverge on economic growth. That rift could affect the debate over cutting key rates, which could drag on for months as some fear a recession and others focus on inflationary pressures. This was reported by sources familiar with the debates, quoted by “Reuters” and BTA.
The ECB cut interest rates in June and is almost certain to do so again in September to slow price growth. Further decisions on the bank’s monetary policy will be much more complicated, however, as the eurozone economy moves into a more volatile position, according to talks with nearly a dozen sources.
At the heart of the debate is how weak economic growth and a possible recession will affect inflation, which the financial institution aims to reduce to 2 percent by the end of 2025. Although much of the discussion is private, conversations with directly informed sources attest to a variety of viewpoints. An ECB spokesman declined to comment on the subject when asked by Reuters.
Supporters of the rate cut argue that the economy is weaker than expected, recession risks have risen and companies that have many employees have started to cut jobs. As employment declines, so does household disposable income, undermining consumption and leading to a self-perpetuating decline.
“That would ease price pressures faster than we forecast, and I think the risk of inflation returning below target is real,” said one of the sources, speaking on condition of anonymity.
#Break #ECB #whats
