Latvian Central Bank Governor and European Central Bank (ECB) Governing Council member Mārtiņš Kazāks commented on the possibility of a significant interest rate cut of 50 basis points in December on Thursday.
When asked about his views on the ECB cutting interest rates by 50 basis points in the next meeting, he stated, "Everything should be on the table."
"But we will discuss it in December," he told CNBC on Thursday at the International Monetary Fund's annual meeting in Washington, D.C.
"We will discuss it at the beginning of next year, meeting by meeting, as I said, we will be approaching the 2% (inflation) target," added the central bank governor, who is not usually known for dovish views.
His remarks came after the ECB announced its first consecutive interest rate cuts in 13 years at its October meeting. A day earlier, Banco de Portugal Governor Mario Centeno also made similar comments.
"The fact is that the inflation rate in September was very low, much lower than we expected," Centeno, known as a dovish member of the ECB's Governing Council, told CNBC on Wednesday. Doves tend to favor low interest rates to promote economic growth, while hawks are more concerned about inflation and its impact on society.
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"We need to take that into account," Centeno said when discussing recent inflation data. "After that, we need to look at the data we receive, the trends we have been observing, and of course, 50 basis points may come into play because we continue to rely on data, and the data we are getting points in that direction."
The ECB's rate cut earlier this month marked the central bank's third 25 basis point rate cut this year. The market had fully priced in the move after policymakers signaled reduced inflation risks and weakened growth prospects.
Kazāks emphasized that the bank "is still in a quite restrictive area."
He added, "So, of course, easing the pressure from interest rates is something we need to do, and that is what we will do. Of course, you know, we need to see the data."The inflation rate for the Eurozone in September has recently been revised to 1.7%, lower than the previously official estimate of 1.8%. In contrast, the GDP growth rate in August was 2.2%.
September marks the first time since June 2021 that the Eurozone's inflation rate has fallen below the European Central Bank's 2% target, signaling the end of years of excessive price growth and reinforcing expectations for further interest rate cuts in the near future.
However, Belgian Central Bank Governor and European Central Bank Management Committee member Pierre Wunsch stated that there would only be a reason to cut interest rates by 50 basis points if economic data significantly weakened.
"A 50 basis point move would be a big move, so I think there would only be a reason if we have data, you know, that would be a decrease in the inflation rate. But it could also be in terms of GDP growth going in the wrong direction, which is not what we are seeing today," he told CNBC on Thursday.
"I don't rule out any possibilities," he added. "But we have already started cutting interest rates quite early. I feel that if we can... proceed step by step, without creating unnecessary volatility in the market."
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