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Friday, June 21, 2024

ECB Chief Lane Signals Interest Rate Cut in June

ECB Rate Cut

Frankfurt – In an interview with the Financial Times, ECB Executive Board member Philip Lane signaled that the central bank is poised to cut interest rates at its June policy meeting.

Lane said that “barring major surprises, at this point in time there is enough in what we see to remove the top level of restriction, being at 4%.” This comes after ECB Panetta said she sees a growing consensus for rate cuts.

However, Lane said the ECB will take a “gradual” approach to easing policy and will move “within the zone of restrictiveness.”

The ECB executive board member pointed to recent data showing signs of slowing wage growth and services inflation moderating. While acknowledging that price increases will remain “bumpy” this year, Lane said the downward trend in underlying inflation supports a rate cut in June.

EUR/USD is currently stable following the news:

Lane downplayed the risk of higher second-round effects from wage growth, noting the ECB’s detailed wage tracker anticipates deceleration. He also said the ECB’s inflation projections already factor in a gradual normalization of wages through 2026.

When asked about the possibility of back-to-back rate cuts in June and July, Lane declined to comment on a “meeting-by-meeting” basis. He reiterated that monetary policy will need to remain restrictive to ensure high inflation does not become entrenched.

The interview signals that the ECB is set to take its first step toward easing monetary policy at its June meeting. However, Lane stressed any rate cuts will be gradual and cautious to avoid jeopardizing the ECB’s primary mandate of maintaining price stability.

Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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