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Investing.com -- The European Central Bank (ECB) is on track to achieve its 2% inflation target in the coming months, according to ECB policymaker Peter Kazimir. However, the broader economic outlook remains too uncertain for the bank to provide any guidance on its next policy move.
Kazimir, who is also the governor of Slovakia’s central bank, expressed his confidence in a blog post. "Inflation is approaching its target, and I am confident that we will reach it within the next few months," he stated. This is a significant departure from the bank’s earlier prediction that inflation would only reach 2% in early 2026, suggesting that price growth could occur faster than previously forecast.
Kazimir also discussed the impact of rate cuts on the ECB’s 2.25% deposit rate. He argued that these cuts have positioned the deposit rate in a range that no longer hampers economic growth and could be viewed as near a neutral stance.
However, he cautioned against trying to predict future policy due to the current volatile and often chaotic conditions. "We are operating in a fast-shifting environment," Kazimir said. "Uncertainty dominates the economic landscape."
He pointed to increased global trade tensions, especially those resulting from U.S. tariff policies, as a major source of ambiguity eroding confidence in the economic system.
Despite the uncertainty, markets are still pricing in at least two more rate cuts this year and see a 50% chance of a third move. This suggests the deposit rate could end 2025 at 1.50% or 1.75%.
Kazimir emphasized that the ECB’s decisions would be data-driven and not based on a preset course. "June’s decision will depend heavily on new data, updated forecasts and risk assessment," he said. "This reinforces our commitment to flexibility and agility."
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