ECB Official Dismisses Rate Cut Bias Amid Stable Inflation Outlook

José Luis Escrivá of the ECB Governing Council struck a neutral tone on monetary policy during remarks in Madrid, emphasizing that inflation has effectively returned to the bank's 2% target. "We're operating in unprecedented uncertainty," he told Spanish senators, framing the current economic landscape as complex but not dire.

The central banker pushed back sharply against market speculation of imminent rate cuts during a Bloomberg event earlier that day. "Full optionality means precisely that—no predetermined direction," Escrivá asserted, noting the Governing Council maintains complete discretion meeting-to-meeting. His comments align with ECB Chief Economist Philip Lane's recent assessment that no immediate policy changes appear necessary.

While some policymakers have floated cuts as the more likely adjustment if needed, Escrivá maintained the possibility of hikes remains equally viable. Market expectations currently lean toward unchanged rates at the October 30 meeting, reflecting the ECB's deliberate pause after its historic tightening cycle.