Two important data from the European Central Bank on Monday expressed support for the prospect of a rate cut next week, showing that the rate cut is actually a certainty.
In a speech on Monday, Oli Rehn, a member of the Governing Council of the European Central Bank and President of the Bank of Finland, stressed that inflation in the euro zone is “continuously” falling.
Despite a slight rebound in December, euro zone inflation held steady at 2.4% in April, the seventh consecutive month below 3%. Data for May will be released on Friday.
“As a result of this deflationary process, inflation is continuing to move towards our 2% target, so the time is ripe to ease the stance of monetary policy and start cutting interest rates in June,” Lane said in his speech Published on the Bank of Finland website.
“This obviously assumes that deflationary trends will continue and that geopolitical conditions and energy prices do not suffer further setbacks.”
At the same time, Philip Lane, chief economist of the European Central Bank, said in the report Interviewed by the Financial Times”, “Barring a major surprise, what we are seeing so far is enough to lift the highest level of restrictions.
The comments come ahead of the central bank’s next meeting on June 6.
Rehn and Ryan’s comments on Monday followed a range of similar sentiments expressed by other ECB members.
That suggests the ECB may act sooner than the Federal Reserve, which typically plays a leading role in monetary policy decisions.
Bank of America economists led by Claudio Irigoyen said in a report on Friday that “the Fed and the European Central Bank appear to be decoupling, with the ECB likely to cut interest rates in June while providing support for the U.S. Be prepared for the economy to remain high for a long time.
Debate rages in the United States over when the Federal Reserve might start cutting interest rates.
at the same time, Minutes of the Federal Reserve’s policy meeting from April 30 to May 1 It points to uncertainty among policymakers about the right time to ease policy.
Yrigoyen of Bank of America said the recent “Federal Reserve Speech” and meeting minutes indicate that the United States is not considering cutting interest rates at this time.
“We think the ECB and Fed rate cutting cycles will be very different,” he concluded.
—CNBC’s Jenni Reid and Brian Evans contributed to this report.
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