Belgian Central Bank Chief Cautious on Rate Cuts

Pierre Wunsch, head of Belgium’s central bank and ECB Governing Council member, has asserted that there is no immediate need for the European Central Bank (ECB) to accelerate interest rate cuts, citing strong employment and rising real wages as indicators of economic resilience. Wunsch emphasized a cautious approach to monetary policy, advocating for patience ahead of the upcoming December meeting, where multiple economic indicators will be assessed. He acknowledged that while inflation might temporarily undershoot the ECB's 2% target, this should not provoke hasty decisions, as a soft landing for the economy remains likely. Wunsch's comments reflect a divergence among ECB officials, with some suggesting a potential 50 basis point cut, while others advocate for a more measured response. Current market expectations indicate a 35 basis point cut by December 12, with a 40% chance for a 50 basis point reduction. Overall, Wunsch urges the ECB to adopt a balanced stance in addressing inflation, particularly in light of energy price volatility.