ECB's Sleijpen: risks are balanced, policy is appropriate

AMSTERDAM (Reuters) -Risks surrounding the euro zone inflation outlook are balanced and the current level of interest rates is appropriate, Dutch central bank chief Olaf Sleijpen told a news conference on Monday.

The ECB has left interest rates unchanged since June and markets expect no change even in December, when the ECB releases a fresh set of economic projections, which could show price growth going under the bank's 2% target next year.

"Inflation risks in the euro area are balanced," Sleijpen, one of the newest members of the ECB's rate-setting Governing Council, said.

Euro zone inflation, hovering around the 2% target for most of this year, is set to dip below 2% in 2026 on a statistical base effect, and some policymakers fear that low price growth could get entrenched if firms adjust their wage and price-setting behaviour.

However, most policymakers have been downplaying the undershooting risk, solidifying market bets that the ECB is done cutting interest rates after halving the deposit rate to 2% in the year to June.

"Our December meeting will bring a lot of new data," Sleijpen said. "For now, I would say we are in a good place and if data remains consistent with the current picture in December I would see no reason to say we are no longer in a good place."

(Reporting by Bart Meijer; writing by Balazs Koranyi, Editing by William Maclean)

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