Peter Kazimir Calls for Gradual Interest Rate Cuts

Peter Kazimir, a member of the European Central Bank (ECB) and Governor of the Slovak central bank, stressed the importance of the ECB maintaining a cautious and gradual approach to lowering interest rates. He cautioned against any attempts to stimulate economic growth in a region plagued by deep-rooted structural challenges.

Kazimir emphasized that a step-by-step reduction of interest rates by 25 basis points remains the most sensible strategy for now. He pointed out that a more aggressive monetary easing would necessitate substantial economic changes to justify such an approach.

Furthermore, Kazimir warned that monetary easing is merely a temporary solution and fails to address the core structural issues affecting the European economy. He stated, "Low interest rates may provide short-term flexibility, but they cannot replace the critical structural reforms that are necessary."

The ECB policymaker pointed out that the European economic challenges require comprehensive solutions extending beyond monetary policy alone. He urged policymakers to resist reacting too swiftly to short-term pressures, emphasizing the need for strategic, long-term decision-making.

Kazimir concluded by noting that discussions about the neutral interest rate would become significant when it approaches 2.5%, a reflection of the ECB’s commitment to a balanced and sustainable approach to economic policy.

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