- Risks to economic growth remain tilted to the downside
- We are not pre-committing to a particular rate path
- If incoming data confirms our baseline, we can expect further rate cuts
- But high level of uncertainty calls for prudence in terms of rate-setting
- The balance of risks has shifted from concerns about high inflation to concerns about low growth
- Severe global trade frictions could increase fragmentation of the world economy
- Renewed geopolitical tensions could also affect energy prices
While he wants to make sure that markets know that the ECB can be flexible enough to change its mind, they're not quite going to do so this month at least. A 25 bps rate cut is well locked in by markets and arguably the next one for March as well.
