07 Mar 2024

Florian Heider: “The ECB rejects calls for premature interest rate cuts”

SAFE Director sees the European Central Bank’s latest monetary policy decision as the right measure to stabilize the general price level further

At its meeting today, the Governing Council of the ECB left the interest rate for the main refinancing operations and the interest rates for the marginal lending facility and the deposit facility unchanged. Florian Heider, Scientific Director of the Leibniz Institute for Financial Research SAFE, comments on this decision:

“The ECB has rejected calls for a rapid interest rate cut, and rightly so, as that would have been too soon. With this decision, the central bank is taking the lower risk. Core inflation, in particular, is persisting. At the same time, the European labor market is proving robust, meaning that a return to a lower interest rate level should only occur later. The monetary policy stance since September 2023 is paying off, as seen from the general easing of price pressure. If the ECB were to cut interest rates too early and then eventually have to raise them again, such a zigzag course would be enormously damaging to the ECB’s credibility. Instead, it focuses on cautious expectation management and, thus, on the right course.”

Scientific Contact

Prof. Dr. Florian Heider

Scientific Director