ECB Considers Normalizing Monetary Policy Amid Uncertainty

The European Central Bank (ECB) recently cut rates for the first time in the current cycle without a clear commitment on future moves, although further cuts are anticipated. ECB policymakers, including Fabio Panetta, hint at a gradual and smooth continuation of monetary normalization. Panetta emphasizes the need for data-dependent decisions and warns against providing explicit timing guidance for rate changes. He addresses concerns about sticky inflation in services, stating it requires patience and is not abnormal. Additionally, Panetta stresses the importance of managing risks beyond baseline scenarios, especially in light of potential political and geopolitical uncertainties.