Published by Global Banking & Finance Review®
Posted on February 24, 2025
2 min readLast updated: January 26, 2026
ECB's Pierre Wunsch warns against 'sleepwalking' into excessive rate cuts, urging caution amid economic growth concerns.
(Reuters) - European Central Bank policymaker Pierre Wunsch said the euro zone faces the risk of "sleepwalking" into excessive interest rate cuts and must be prepared to stop soon, the Financial Times reported on Monday.
The Belgian central bank governor said he felt "relatively comfortable" with the market expectation of 2% rates by the end of the year "give or take 50 basis points," the FT said.
On Jan. 30, the ECB cut its deposit rate by 25 basis points to 2.75%, and policymakers guided for a further reduction in March as concerns over lacklustre economic growth supersede worries about persistent inflation.
"I'm not pleading for a pause in April but we must not sleepwalk to 2% (interest rates) without thinking about it. If the data justify a new cut, we'll cut. If they don't, we might have to pause," the Financial Times quoted Wunsch as saying on Friday.
He also highlighted growing uncertainty over the appropriate level of interest rates, saying he was "not even sure" whether rates remained restrictive for growth and inflation.
The ECB has cut interest rates five times since last June and policymakers are increasingly vocal in their debate about just how much farther rates must come down when inflation is still a bit too high but economic growth is barely above zero.
(Reporting by Surbhi Misra in Bengaluru; Editing by Tom Hogue and Kim Coghill)
The article discusses ECB's Pierre Wunsch warning about the risks of excessive interest rate cuts in the euro zone.
The market expects interest rates to be around 2% by the end of the year.
The ECB recently cut its deposit rate by 25 basis points to 2.75%.
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