The European Central Bank (ECB) remains flexible going into its final meeting of 2024, according to Governing Council member Peter Kazimir, who said disinflation is on a “solid footing” and more cuts in borrowing costs are possible.

“Our decision to lower rates in October leaves the December meeting wide open,” Kazimir said on Monday in an op-ed. “All options remain on the table.”

The ECB reduced interest rates for the third time this year last week as a quicker retreat in inflation allowed it to offer support to the region’s stumbling economy. While officials didn’t specify when or how quickly borrowing costs will be decreased from here, investors are betting on a flurry of cuts in the months ahead.

Speaking earlier on Monday, Lithuania’s Gediminas Simkus and Latvia’s Martins Kazaks said borrowing costs will be reduced further should the downtrend in inflation persist.

“The direction is clear — less restrictive monetary policy,” Simkus told reporters in Vilnius. “I can’t yet tell what will the decision be in December. But the direction is clear — down.”

Kazimir said that if new data and forecasts confirm the recent acceleration in disinflation, the ECB will be in a “strong and comfortable” position to continue its easing cycle, and will remain “flexible and ready to act appropriately.”

But to declare victory, he’d need to see further proof of services prices and wage gains slowing.

“I’m increasingly confident that the disinflation path is on solid footing,” Kazimir said. “But the Doubting Thomas in me still needs to see further proof of a sustainable return to target.” 

  - Bloomberg