ECB’s Elderson Signals Balanced Inflation Risks, Endorses Steady Rates
European Central Bank Executive Board member Frank Elderson said inflation risks in the euro area are broadly balanced, reinforcing the case for keeping interest rates steady. His remarks point to a patient, data-dependent stance as the ECB gauges the durability of disinflation and the outlook for growth.
Following the conclusion of its rate-cut phase in June 2025, the ECB is in a holding pattern, assessing how wages, energy prices, and demand dynamics filter through to core inflation. Elderson’s assessment suggests policymakers see the current policy rate as appropriate for guiding inflation toward the 2% objective without over-tightening financial conditions.
Officials have also emphasized that policy will not pivot on short-lived or minor deviations from the inflation target. Instead, the Governing Council aims to balance risks on both sides—responding only if price pressures or activity data show a persistent shift from the path to medium-term price stability. For households, firms, and financial markets, this signals a period of relative rate stability while the central bank evaluates incoming data.
Key Points – Elderson says euro-area inflation risks are broadly balanced. – Current ECB policy rate is viewed as appropriate. – The ECB ended its rate-cut cycle in June 2025 and is now on hold. – Policymakers will not react to small or temporary deviations from the 2% target. – Decisions remain data-dependent, with focus on wages, energy, and demand trends.
