2024-09-04
Finansinių naujienų portalo „Econostream Media“ interviu su Gediminu Šimkumi, Lietuvos banko valdybos pirmininku. Interviu paskelbtas 2024 m. rugsėjo 3 d.
Q: Governor, we don't think there's any doubt about a 25bp cut in September. But some people might, out of concerns about growth, for example, already start pushing at the September Council meeting for a cut in October. Do you see much chance of a cut in October?
A: We started cutting in June, even though at one point in time the market expected us to start sooner. We are gradually, consistently and predictably delivering the appropriate policy moves for the circumstances. The question about cutting in October is to a large extent the same as the question of whether at one of the meetings left this year we would consider cutting by 50bp. I know the market is currently pricing in an October cut with a probability of about 40%. A couple of months ago, the market didn’t see any chance of an October cut. The fact that the market now attaches a fairly high probability to an October cut does not correspond to the data, in my view. The ECB was not late to act, and our monetary policy is aligned with the data. Inflation is falling quite noticeably. But is this unexpected? No. It was anticipated already some time ago that inflation developments would be bumpy this year. So, we shouldn't be surprised if we see inflation higher again in the coming months, and we should not be afraid that the sky is falling. It’s all been anticipated. And while I have not seen the newest macroeconomic projections yet, I don't believe that they will change substantially, because the data have been more or less in line with what we expected. So, we still believe that we are gradually and predictably converging to the 2% inflation target in the second half of next year. Again, we were not late to act, and we are gradually and predictably implementing the necessary steps. For the cut in September I see a quite clear case. For cutting in October or by more than 25bp, I find it quite unlikely.
Q: And is the low probability of a cut in October due to the absence of new projections then?
A: No. It has to do with the fact that inflation is already very gradually converging to 2%. Previously we were complaining a lot about forecasts errors, so the way it is now is how it should be: the inflation projections have been fluctuating in a quite narrow interval since the beginning of 2024, and in an even narrower one for 2025. Time passes, but the inflation projections remain very stable. This is reassuring. So, my thinking of low probability for a cut in October has nothing to do with not having updated inflation projections, because even without new projections, you can quite reasonably act on the basis of the data you have and whether or not those data are consistent with what was expected.