Published by Global Banking & Finance Review®
Posted on October 17, 2025
2 min readLast updated: January 21, 2026
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ECB rate cuts are unlikely as the economy remains resilient and inflation stays near target, according to Belgian central bank Governor Pierre Wunsch.
WASHINGTON (Reuters) -The chances of further interest rate cuts from the European Central Bank are declining given the economy's resilience and inflation holding around the 2% target, Belgian central bank Governor Pierre Wunsch said on Friday.
The ECB cut rates by a combined 2 percentage points in the year to June but has been on hold ever since as policymakers contemplate if further easing may be needed due to the potential for consumer prices to rise too slowly.
"Given that the economy is proving resilient, the chance that further rate cuts will be needed is receding," Wunsch told Reuters on the sidelines of the IMF's annual meeting. "I’m quite comfortable where we are today, though I remain open."
Still, risks are skewed towards interest rates going lower, since the impact of tariffs is yet to fully play out, the dollar is weak and there is the risk of China dumping surplus goods, Wunsch added.
Inflation is set to dip to 1.7% next year before rising back to target in subsequent years, fuelling concern among some policymakers, particularly around the bloc's southern edge, that price growth could get stuck below target.
"I don’t see any major risks for inflation either on the upside or downside," Wunsch said. "But I also don’t get nervous about numbers like 1.8% or 2.2%," he added.
Wunsch also said that not all deviations from the target required the same policy response and the ECB needed to study the underlying fundamentals in determining the intensity of its policy action.
"If we’re growing at potential, the labour market is healthy, but inflation is still below target, I would support a mildly supportive stance but definitely not aggressive accommodation," he said.
Wunsch also said he was comfortable with market pricing for interest rates, which sees close to no chance of a rate cut this year and see a one in two probability of a move by next June.
(Reporting by Balazs KoranyiEditing by Peter Graff)
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to achieve macroeconomic objectives like controlling inflation and stabilizing currency.
Interest rates are the cost of borrowing money, expressed as a percentage of the total amount borrowed. They can influence economic activity by affecting consumer spending and investment.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
The European Central Bank (ECB) is the central bank for the eurozone, responsible for monetary policy in the Euro area, aiming to maintain price stability and oversee the banking system.
Economic growth is the increase in the production of goods and services in an economy over a period, typically measured as the percentage increase in real GDP.
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