Piero Cipollone warns: the ECB's monetary policy risks becoming too restrictive
On rates 'we will take our decisions meeting by meeting,' Cipollone explained in an interview with Le Monde, 'but the data so far confirm our direction of travel and I hope they will allow us to continue to be less restrictive.
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"There is a real risk that our stance (ECB ed.) could become too restrictive. We need to ensure that inflation converges towards our target without unnecessarily dampening the economy, because we desperately need investment and growth in Europe."
So said ECB board member Piero Cipollone in an interview with Le Monde reported on the central bank's website, stressing: 'Any delay in this area puts us at a serious disadvantage.
On the rates 'we will make our decisions meeting by meeting', however 'the data so far confirm our direction of travel and I hope they will allow us to continue to be less restrictive'.
'In June,' Cipollone explains, 'our projections for GDP growth in the euro area in 2024 were 0.9 per cent. Second-quarter data are consistent with these projections, but more recent data, such as consumer confidence and activity indicators (purchasing managers' index), particularly for the manufacturing sector, have not been so encouraging. This poses a risk to the euro area's growth prospects. Investment remains weak, suggesting that companies do not believe in a strong recovery. This also weakens our future growth potential by reducing the ability of our economy to develop and adopt new technologies to increase productivity. Our inflation projections suggest that we will return to our 2% target in the second half of 2025. Until then, inflation figures will fluctuate, but we are broadly on track."
"These projections," emphasises Cipollone, "are based on market expectations of rate cuts.We are not committing ourselves in advance to any path. We will make our decisions on a meeting-by-meeting basis'.
