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Investing.com -- The European Central Bank (ECB) can afford to take time before considering additional interest rate changes, according to Estonian policymaker Madis Müller, who suggested the bank may not need to ease much more in the current cycle.
Speaking Tuesday at the ECB Forum on Central Banking in Sintra, Portugal, Müller told Reuters that "it makes sense for policy to stay on hold for a while."
"It’s reasonable not to change rates in July," Müller stated. "While it’s too early to discuss the autumn, it’s also reasonable to assume that we should not go much lower during the current cycle, unless the euro area economy will turn out to be much weaker than we expect."
Several factors support the ECB’s patient approach. Inflation has essentially reached the bank’s 2% target, economic growth is recovering, and interest rates are no longer hampering growth.
The outlook could change significantly due to trade negotiations with the United States and potential increases in military and infrastructure spending, particularly in Germany. These factors suggest policymakers should wait until the situation becomes clearer.
Müller noted that risks around inflation are now broadly balanced – an unusual situation for the ECB, which has spent the past decade fighting either too-low or exceptionally high inflation.
The euro’s rapid appreciation could potentially affect price growth and exporters’ profitability. The currency was trading just above 1.18 against the dollar on Tuesday, its highest level since autumn 2021 and well above the 1.02 seen in early 2025. Despite this rise, Müller expressed little concern.
"The euro exchange rate against the dollar is well within the historical range," he said. "The appreciation this year has indeed been quick but we’re not at a level where I am particularly concerned."