Remarks of Officials

On October 24th, ECB Governing Council Member Wunsch stated that it's too early to talk about a 50-basis-point interest rate cut in December. Meanwhile, Governing Council Members Kazaks and Muller argued for maintaining a gradual path of interest rate reductions, and Nagel suggested that the ECB should not rush into cutting rates.

On October 23rd, Bank of Canada (BOC) Governor Tiff Macklem held a press conference stating that Canada has returned to a low inflation level, and the central bank's focus is now on maintaining low and stable inflation and ensuring a soft landing. If the economic trajectory aligns with expectations, further rate cuts are anticipated.

On Wednesday, October 23rd, the Bank of Canada announced a 50-basis-point cut to its policy rate, reducing it from 4.25% to 3.75%, in line with market expectations. This marks the fourth and largest rate decrease by the Bank since early June this year.

On Monday, October 21, several FOMC officials weighed in on the outlook for monetary policy, with three members signaling support for a slower pace of rate cut. They advocated for a cautious, gradual approach toward achieving normal or neutral levels in policy rates. In contrast, San Francisco Fed Chair Daly suggested expectations for ongoing policy easing.

Christine Lagarde, president of the European Central Bank President (ECB) said at a press conference on Thursday that economic activity has been somewhat weaker than expected. The latest data points to weaker growth and downside risks to growth. The disinflation process is well on track, but wage pressures remain strong. Inflation is expected to rise in the coming months before falling back to target levels next year.

The European Central Bank Governing Council today decided to lower the three key interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 3.25%, 3.40% and 3.65% respectively. Inflation is expected to rise in the coming months, before declining to target in the course of next year.

On October 15, San Francisco Fed President Mary Daly said that current interest rates remain far from neutral levels. The Fed might implement one or two additional rate cuts of 25 basis points each before the year's conclusion. However, Daly is open to the possibility of pausing rate cuts at one of the remaining two Federal Open Market Committee (FOMC) meetings this year.

Fed Governor Waller said Monday that the US economy could still run at a faster pace than expected, and the current data allows the Fed to proceed with moving policy toward a neutral stance at a deliberate pace.

On Thursday, the European Central Bank released the September meeting minutes. Owing to a weaker economy, easing prices, and lower wage pressures, further rate cuts are inevitable. It was mentioned that a gradual and cautious approach currently seemed appropriate because it was not fully certain that the inflation problem was solved.