AMSTERDAM, Dec 19 (Reuters) – Risks to euro zone growth and inflation are fairly balanced but remain large, so the European Central Bank needs to keep an open mind about future policy moves, Dutch central bank chief Olaf Sleijpen said on Friday.
The ECB kept rates steady on Thursday and revised up some of its growth and inflation projections, a move that probably closes the door to further cuts in borrowing costs in the near term.
But policymakers including Sleijpen were rather cautious in their public comments on Friday, not wanting to take any option off the table just yet given oversized risks that could quickly shift the outlook.
“We are still in a good place, inflation in Europe is moving very close around 2%. You might say it’s almost a kind of central banker’s nirvana,” Sleijpen told a news conference in Amsterdam. “But at the same time, we know the risks are still large.”
“That’s why it is important we maintain our meeting-by-meeting approach and continue to depend on data,” he said. “Risks for growth and inflation I think are fairly balanced, even though they are big.”
The ECB did not give an overall risk assessment for growth and inflation and instead listed a host of factors that may alter the outlook.
However, sources with direct knowledge of the ECB discussions said that most policymakers see risks around the growth outlook as broadly balanced, even if a few thought growth could turn out lower than embedded in the central bank’s own projections.
In the case of inflation, there was even less debate as most policymakers thought risks were balanced.
(Reporting by Bart Meijer; Writing by Balazs Koranyi; Editing by Hugh Lawson)
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