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Friday, June 21, 2024

ECB’s Panetta Sees Growing Consensus for Rate Cut

Shift in ECB’s Stance

The European Central Bank (ECB) is moving closer to its first interest rate cut as inflation across the eurozone shows signs of slowing. Fabio Panetta, an ECB policymaker and the Bank of Italy governor, expressed his view on the growing consensus within the central bank regarding the need for a rate reduction during a press conference following the G7 finance meeting in Stresa, Italy, on Saturday.

Panetta stated, “It seems to me that a fairly general consensus has emerged on the possibility of a rate cut.” This sentiment was echoed by Bundesbank President Joachim Nagel, who, on Friday, suggested that the ECB should be prepared to lower interest rates during its upcoming meeting on June 6. Nagel also noted that the increase in negotiated wage growth across the 20-nation currency bloc was not a significant cause for concern.

The shift in the ECB’s stance comes as inflation demonstrates a common underlying trend, declining in all major economic areas. Panetta has also pointed out that risks to financial stability have diminished, further supporting the case for a more accommodative monetary policy.

The G7 meeting, which brought together finance ministers and central bankers from the world’s leading industrial democracies, also included a stress test focusing on the institutions’ performance in the face of cyber shocks. Panetta reported that the outcome of the test was satisfactory, indicating that the financial systems of these nations are well-prepared to handle such challenges.

As the ECB prepares for its June 6 meeting, the growing consensus among policymakers suggests that a rate cut is increasingly likely. This move would aim to stimulate economic growth and maintain price stability in the eurozone, as inflation returns to more manageable levels.

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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