ECB’s Simkus Advocates for December Rate Cut Amid Inflation Concerns

Gediminas Simkus, Lithuania's central bank chief and ECB Governing Council member, has issued a stark warning: without further rate cuts, the Eurozone risks missing its inflation target. "From a risk-management perspective, it's better to cut than not," Simkus declared, emphasizing that both price stability and economic growth WOULD benefit from a December move.

The dovish stance comes as inflation drivers weaken—Chinese import demand falters, the euro strengthens, and climate policies face delays. Core inflation already shows softening trends, with wage growth decelerating and fiscal stimulus unlikely to provide near-term demand support. "Of course there are some upside risks, but those on the downside definitely dominate," Simkus noted during discussions with European finance ministers.

This position puts Simkus at odds with most ECB colleagues. President Christine Lagarde maintains current rates are in a "good place," a view echoed by several council members. The policy divergence highlights growing tensions as the eurozone economy shows signs of strain while cryptocurrency markets watch for potential capital rotation into digital assets during monetary easing cycles.