Back-to-back reductions in borrowing costs by the European Central Bank are “not necessarily an indication” of faster rate cuts to come, Slovenia’s central bank governor has said, arguing that its next actions will be guided by new signals on inflation dynamics.
Bo?tjan Vasle’s comments come as traders now expect consecutive cuts at each of the next four meetings, according to levels implied by swaps markets. Such a path would lower the deposit rate to 2.25 per cent by April — the lowest point since February 2023 and close to the level that most economists believe neither restricts nor stimulates economic activity.
The ECB has lowered the key deposit rate by half a percentage point to 3.25 per cent at its governing council meetings in September and October, amid signs of softer inflation and weaker economic activity. Vasle hosted the ECB’s meeting on Thursday in Slovenia’s capital Ljubljana.