European Central Bank (ECB) board member Piero Cipollone stated that the ECB could continue cutting interest rates due to a slowdown in inflation. However, he cautioned that there is a risk the bank could maintain overly tight policies, potentially harming the economy. Cipollone’s comments come as the ECB prepares for a possible rate cut on September 12, following a reduction in June from a record high.
While Cipollone did not explicitly call for a September rate cut, he noted that inflation remains aligned with the path predicted three months ago, which already included potential rate cuts in September and December. “The data so far confirms our direction of travel, and I hope that they will allow us to continue to be less restrictive,” Cipollone said in an interview with Le Monde.
He also highlighted concerns about weak growth in the euro area, pointing to disappointing data in consumer confidence and manufacturing activity. Cipollone warned that weak investment signals a lack of confidence in a strong recovery, which could hurt the euro area’s future growth potential by limiting the development and adoption of new technologies.