ECB’s Cipollone: There are still many risks in the pipeline
Par Sagar Dua
Date de publication: 4 Dec 2025 | Date de modification: 4 Dec 2025
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European Central Bank (ECB) executive board member Piero Cipollone said in an interview with Nikkei during the European trading session on Thursday that monetary policy adjustments would be required if economic conditions don’t act in line with expectations.
European Central Bank (ECB) executive board member Piero Cipollone said in an interview with Nikkei during the European trading session on Thursday that monetary policy adjustments would be required if economic conditions don’t act in line with expectations.
Additional remarks
We will stick to G7 communique language on FX, when asked whether the ECB would accept any Japan’s decision to intervene in FX market to support weak Yen.
We will need to act if our assumptions do not materialise as there are still many risks in pipeline, when asked if it is premature to declare an end to rate cuts.
Market reaction
EUR/USD extends its winning streak for the ninth trading day on Thursday, trading marginally higher to near 1.1680 at the press time. The major trigger behind strength in the pair appears to be weak US Dollar (USD), and not ECB's Cipollone comments as seems ineffective on expectations for the Eurozone's interest rate outlook.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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