Introduction
The European Central Bank (ECB) may need to make further adjustments to its monetary policy if the current macroeconomic and inflation forecasts hold true, according to ECB policymaker Jose Luis Escriva.Context
Recently, the ECB hinted at a potential pause in rate changes as inflation in the euro zone returned to its target of 2%. Escriva, who also serves as the Governor of the Bank of Spain, expressed confidence in the ECB's current strategy, which involves a gradual approach with incremental 25-basis-point rate cuts.Developments
Escriva shared insights during an interview with El Pais, emphasizing that the central scenario of approximately 1% GDP growth and 2% inflation might necessitate slight adjustments if these trends persist. Over the past year, the ECB has reduced rates by 2 percentage points to support a euro zone economy affected by unpredictable U.S. economic and trade policies.He noted a decline in confidence regarding the dollar and U.S. assets since U.S. President Donald Trump took office. Escriva observed that the dollar has not been perceived as a "safe haven" since April, suggesting that its status as a dominant global reserve currency may have peaked.
Additionally, he indicated that the Bank of Spain is set to revise its forecast for Spanish economic growth downward by a few decimal points in the upcoming report.