Robert Holzmann, the European Central Bank policy maker and Austrian central bank chief, said that despite the significant slowdown in inflation in the eurozone, it is too early to talk about monetary policy easing, and there is no guarantee for rate cuts in 2024
"Monetary policy normalization is showing an impact on slowing inflation. But it is premature to think about rate cuts at this stage," Holzmann warned, adding that inflation in the eurozone is likely to reach the ECB's 2% target in the next two years, though the path there will be “challenging.”
The final data, published by Eurostat earlier this month, showed that consumer price growth slowed in November, reaching the lowest level since July 2021. Meanwhile, core inflation fell to its lowest level since April 2022. According to the report, the consumer price index rose by 2.4% per year after an increase by 2.9% per year in October. In December, however, inflation is likely to pick up on account of an upward base effect for the cost of energy. Eurostat reported that the core consumer price index - excluding energy, food, alcohol and tobacco - rose by 3.6% per year, as expected, after an increase by 4.2% per year in October.
Following its December meeting, the ECB again left interest rates unchanged, although ECB President Christine Lagarde made it clear that market bets on a rate cut as early as March may be premature. This is partly due to the fact that consumer price growth will accelerate again in the coming months due to base effects. However, markets are still pricing in a 165 basis point ECB rate cut next year.