ECB rate cut in June looks increasingly likely, but still worth watching: Joachim Nagel | Wilnesh News

European Central Bank policymaker Joachim Nagel said on Wednesday that a rate cut in June looked increasingly likely, but added that some parts of upcoming inflation data still looked higher than expected.

“Talking about the June meeting, I think the likelihood of a rate cut in June is increasing, but there are still some caveats,” the Bundesbank president told CNBC’s Karen Tso at the International Monetary Fund’s spring meetings in Washington, D.C.

“Core inflation remains high, and services sector inflation is also high. For the June meeting, we will get our forecasts, so we will get new forecasts, and if it is confirmed that inflation is indeed falling and, as I said, we will achieve our target in 2025, then what is the likelihood of this rate Sex is going to get higher as the June session comes to an end,” Nagel said.

Asked about lingering wage-price pressures in the euro zone, he said wages in Germany still have some momentum but are still on a downward trajectory overall. On energy prices, he said the recent rise in oil prices compared to last year was what he called “uncertainty” in a volatile environment.

“I think we learned our lesson in 2022, we’re going to face this,” he said of the European crisis, which has been particularly severe for his home country’s industrial sector.

“We are probably more resilient than we were two years ago. But nonetheless, if oil prices, energy prices go up, that’s not just Germany’s business, it’s all of our business.”

Many ECB officials have recently made remarks on interest rate expectations.

Earlier on Wednesday, Portugal’s central bank governor Mario Centeno said it was “time to change the current monetary policy cycle.” Centeno noted that inflation was slowing but also reiterated that the ECB’s main decision-making body is data-driven.

He said the European Central Bank’s interest rate decision in June will be “very important”.

“I’m sure we will respond in line with the economic recovery we forecast for the euro zone,” he told CNBC’s Tso, noting that market expectations for June were “very clear.”

The market is widely pricing in the European Central Bank’s first interest rate cut in June.

On Thursday, the European Central Bank kept interest rates unchanged for the fifth consecutive time. The central bank also changed its language on a possible rate cut, noting that a rate cut “would be appropriate” if it was confident that inflation would fall back to its 2% target “in a sustained manner.”

Inflation in the Eurozone slowed to 2.4% in March, an increase that exceeded expectations.

Earlier this week, ECB President Christine Lagarde said the ECB would cut interest rates soon unless there were any major shocks. She told CNBC’s Sarah Eisen that the deflation process is proceeding as expected.

“We just need to have a little more confidence in this deflationary process, but if it develops as we expect, if we don’t have a major shock to our development, we will be heading towards a point where restrictive monetary policy will have to be relaxed,” she said.

Separately, Austrian Central Bank President Robert Holzmann said on Wednesday that the European Central Bank is paying attention to economic growth and inflation because both can affect monetary policy and interest rate decisions.

Holzman said geopolitical tensions in the Middle East were the biggest risk to a rate cut, particularly because of its potential impact on energy prices.

He also added that he was not yet fully committed to a June rate cut, explaining that the bank was awaiting the outcome of a series of wage negotiations in the spring as well as developments in the oil market.