You can continue to cut rates, researchers tell ECB

FRANKFURT - The European Central Bank faces an "easy last kilometre" in its fight against inflation and can continue to slowly cut interest rates, two researchers are set to tell the ECB's top brass next week.

"This analysis indicates that there are reasons to be optimistic about inflation, both in the immediate and the more distant future," Primiceri and Giannone wrote in their paper.ECB board member Isabel Schnabel has been warning that "the last mile of disinflation" would prove "the most difficult" after a sharp drop in energy prices helped bring down inflation from its 10% peak in late 2022 to 2.6% last month.

If the ECB had tightened policy sooner, inflation would have peaked at just 6% but at the price of one percentage point of lost economic output, the paper argued.

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