Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

ECB rate cut coming, but not just yet, says Governing Council's Kazimir

Published 03/11/2024, 05:37 AM
Updated 03/11/2024, 05:41 AM
© Reuters. FILE PHOTO: A view shows the board of the European Central Bank (ECB) building, on the day of the monthly news conference following the ECB's monetary policy meeting in Frankfurt, Germany, September 14, 2023. REUTERS/Wolfgang Rattay/File Photo
NG
-

FRANKFURT (Reuters) - The European Central Bank is increasingly confident that inflation is coming down, but should still hold off on an interest rate cut until June, Slovak Governing Council member Peter Kazimir said on Monday.

The ECB held rates unchanged at a record high last week, but its chief Christine Lagarde said discussions over easing policy have begun and plenty of relevant information would become available by June.

"We will learn a bit more in April, but only in June, with new forecasts at hand, will the level of confidence reach the threshold," Kazimir, the conservative chief of Slovakia's central bank, said in a blog post.

"The current picture clearly favours staying calm for the coming weeks and delivering the first rate cut in summer," he added.

Markets now see four interest rate cuts this year, with the first move coming in June, indicating that investors are betting on a move at all but one meeting between June and December.

Sources close to the discussion told Reuters on Friday that a clear majority of policymakers were in favour of a June move, and some have privately floated the idea of further move in July to win over a small group that would prefer an earlier start.

Kazimir said confidence was "gradually building" that inflation would come back to the 2% target next year, but warned that wage pressures still remain far too high, despite a noted slowdown.

He added that looser fiscal policy, a rebound in natural gas prices and the hefty cost of the green transition also add to potential upside risks.

© Reuters. FILE PHOTO: A view shows the board of the European Central Bank (ECB) building, on the day of the monthly news conference following the ECB's monetary policy meeting in Frankfurt, Germany, September 14, 2023. REUTERS/Wolfgang Rattay/File Photo

"This doesn't mean we won’t discuss how to dial back our restrictive policy stance in the meantime," Kazimir said. "On the contrary, we will use the weeks ahead to do just that."

Once rates start coming down, Kazimir said he favours a smooth and steady cycle of easing.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.