ECB’s Wunsch says the Bank can cut interest rates before wages inflation falls to 3%

European Central Bank Governing Council member Pierre Wunsch, Governor of the National Bank of Belgium spoke at a a news conference on the Belgian national bank’s annual report. Comments were embargoed but have now been published.

The European Central Bank
will have to gamble soon with an interest rate cut even though
wage inflation and price rises for services are uncomfortably
high

• “We are going to have to make a bet at some point,”
• felt the Bank should act “before so long”, without specifying a
  month
• He said the ECB was getting to a point where it could react
  to inflation heading in the right direction.
  “But it will remain a cautious move on the basis of what I
  know today because of the problem that has been commented again
  and again and again that service inflation and wage developments
  are still running at levels that are ultimately not compatible
  with our objective,”
• “we are not going to wait until we see wage development at 3%
  before we cut rates. I guess we’ll do it before and that’s why I
  say it’s important we need to take a bet,”

This article was written by Eamonn Sheridan at www.forexlive.com.