Governor Peter Kažimír: Step one: check

The long-awaited cut in key interest rates, the first since September 2019, marks a turning point. It came on the back of reaffirmed expectations of a continued gradual disinflationary trend alongside steady economic recovery.

We have taken the first, very important, step. Last week’s decision sends a clear signal: we expect inflation to continue decreasing from its record highs. This decline is going to be bumpy, but we’re heading toward the target.

That being said, staying realistic and avoiding excessive optimism, overdo expectations and hasty decisions is crucial.

The economic situation in the eurozone remains fragile, and the “inflation beast” isn’t beaten yet. We must remain vigilant.

There’s still a non-negligible risk of resurfacing inflationary pressures linked to global events or rushed rate cuts.

For now, proceeding one step at a time without ruling anything out is the smartest way forward.

We can afford to enjoy the summer without hurrying into the decision. We don’t need to rush and there’s no reason to rush.

By autumn, we’ll have a lot of new information and data about the economy’s performance, the labour market situation, and economic outlook.

September will be a pivotal month. We’ll get fresh inflation estimates for this year and the next two years. That will be the right moment to reassess our stance and decide whether we need to adjust our monetary policy settings. In short, whether to cut rates or not.

All in all, I’m satisfied with our decision last week. The current economic data doesn’t suggest we need to rush. We know the destination and I’m confident we’re moving towards it. I will wait for the new data in September.

If further adjustments are needed, we’ll make them; if not, we’ll stay the course.