European Central Bank (ECB) Governing Council member and Governor of the National Bank of Slovakia, Peter Kazimir, is the only official who truly opposes the third interest rate cut next week, even though other officials' statements and market pricing have already indicated that the rate cut next week is almost a done deal. Kazimir said to reporters, "The media believes that lowering interest rates is a foregone conclusion. But I have to say, I don't entirely believe that we should make decisions based on a single good number." He was referring to the inflation rate in September, which fell below the 2% target for the first time since 2021.

However, his hawkish colleagues are more tolerant towards further monetary policy easing. German Bundesbank President Joachim Nagel said on Tuesday that he would consider a rate cut in October. ECB Executive Board member Isabel Schnabel acknowledged the increasing weakness of the Eurozone economy and did not oppose another reduction in the deposit rate.

This momentum has been strengthening since business surveys showed a worsening economic outlook in the Eurozone and inflation cooling faster than expected. The market expects that the ECB will cut rates by 25 basis points to 3.25% on October 17th with a probability of over 90%, and expects another rate cut in December – the last meeting of 2024.

Advertisement

Earlier on Wednesday, the last day before the ECB's policy meeting's one-week silence period, Banque de France Governor François Villeroy de Galhau reiterated that a rate cut is "very likely" and will not be the last. Latvian Bank Governor Martins Kazaks and Bank of Greece Governor Yannis Stournaras also expressed their expectations for two more rate cuts by the end of the year.

Kazimir is less certain: "I cannot rule out the possibility of a rate cut next week, but it is crucial to make decisions based on the overall summary of information. We will receive key information in December."

This makes him the only public voice seriously questioning the possibility of a rate cut at the upcoming ECB meeting, even the hawkish figure, Austrian National Bank Governor Robert Holzmann, also dodged the topic.

Bloomberg Senior Eurozone Economist David Powell said, "We believe that the ECB will lower borrowing costs by 25 basis points in October and December. After that, we will see policymakers making quarterly adjustments to their policies as they grope their way towards neutrality."

The policy decision in October is only five weeks after the last rate cut in September, resulting in fewer data points to judge the economic situation. In addition, this meeting will not include new forecasts that guide policymakers.

The ECB has already stated that it expects inflation to rise again in the coming months, but several officials, including Banco de Portugal Governor Mario Centeno, have warned that there is also a danger of inflation falling below the 2% target.

Kazimir is less worried about this point. He said, "I would never wake up one morning and feel that the inflation rate should be far below 2%. On the contrary, we still lack enough confidence that we have already emerged from the predicament and that a sustainable 2% inflation target is entirely realistic."