Mission Accomplished

Last week’s decision put us in a comfortable position; we’ve cut rates to reach neutral territory without compromising our ability to respond if inflation were to pick up again.

It’s safe to say that there’s growing confidence that we’re winning the inflation fight.

As things stand now, I think we’re nearly done with, if not already at, the end of the easing cycle.

The next rate steps depend entirely on economic developments and our assessment of these developments.

We’re seeing real progress toward the price stability we promised. The great news is that more persistent inflation components are finally coming down, but risks remain in place.

The journey is not over yet, and we continue to face considerable uncertainty.

Looking ahead, I continue to see clear downside risks to growth, and there is also uncertainty about future price developments.

For now, it would be a mistake to neglect upside inflation risks. We can’t simply assume the path we’re on will be without obstacles.

Supply chains have stabilised for now, but we should pay closer attention to the possibility of renewed supply-chain disruptions and global economic weakness.

In short, risks in both directions remain very much alive.

Under current circumstances, we need to keep all options open for our future meetings.

Monetary policy must remain nimble. No one will, nor should they, pre-commit to any future decisions.

Incoming data throughout the summer will provide a clearer picture and guide our decisions on whether further fine-tuning is needed.

In short, last week’s cut was a waypoint.

It strikes the necessary balance: supportive enough to guard against an unnecessary economic slowdown, restrained sufficiently to respect lingering inflation risks, and, most critically, flexible enough to adapt as new evidence arrives.

In the end. Flexibility is the best safeguard of price stability, and that is precisely what we intend to preserve.