03/08/2024 – 12:55
Head of the European Central Bank (ECB) and president of the Central Bank of Estonia, Madis Müller stated that the euro zone economy is moving “in the right direction”, with inflation gradually cooling towards the 2% target. However, Müller clarified that the decision to maintain the restrictive level of monetary policy reflects the “need for greater confirmation on the downward trend in prices before starting interest cuts”.
“It is possible that this sufficient feeling of confidence will emerge based on economic indicators in the coming months”, wrote the director, in a statement released this Friday, adding that a “drop in interest rates is likely in the future”.
According to him, ongoing wage negotiations in most European countries will be important in determining whether wage growth will help or hinder the disinflation process.
Like the president of the ECB, Christine Lagarde, Müller highlighted that he will monitor possible pressure from wages on services inflation or whether there will be relief in price transfers, given the high corporate profit margins.
The leader also reiterated the central bank's economic projections, which predict a return of inflation to 2% next year and stagnation in activity. However, Müller pointed out that the “probable” monetary relaxation should support investments in companies and the real estate market, just as the fall in inflation should increase real domestic income and increase consumption spending, helping to boost economic recovery.
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