ECB Governing Council member and Bank of Slovenia Governor Bostjan Vasle said on Friday that June may be the right time to start cutting interest rates and is open to subsequent actions.
The Zhitong Finance App learned that ECB Management Committee member and Bank of Slovenia Governor Bostjan Vasle said on Friday that June may be the right time to start cutting interest rates and is open to subsequent actions. In an interview, he said that although the labor market is still “very strong,” there are no excessive wage fluctuations, and the inflation data is in line with expectations. He said he was “satisfied” with the ECB's current reliance on data.
Bostjan Vasle said, “Unless there is a major accident, June is a reasonable and realistic time to cut interest rates, but I can't say what will happen later.” “I'm open to different possibilities. I would like to wait for more information.”
As the inflation rate approaches the target level of 2%, the ECB is expected to cut interest rates at the June June policy meeting, and policymakers seem inclined to cut interest rates further every quarter as they update economic forecasts. Investors expect the ECB to cut interest rates three times by the end of the year. However, policymakers emphasized that possible shocks — geopolitical shocks in particular — would subvert such expectations.
ECB Executive Board member Isabel Schnabel sent the clearest signal so far, that the ECB is unlikely to cut interest rates again in July after cutting interest rates in June. She said on Friday that a second rate cut “doesn't seem necessary.”
In determining the best course of action, the ECB focused mainly on wage growth, which remains strong. Although recent data shows that wage increases in negotiations did not slow significantly in the first quarter, European Central Bank Vice President Luis de Guindos said he expected wage growth to slow down.
It is worth noting that the Federal Reserve's official statement last week that borrowing costs will remain high for a longer period of time may weaken the euro and increase European inflation, or prompt the ECB to relax policies more actively to offset the tightening of the US financing environment. “I'm really concerned about what's happening in America,” Bostjan Vasle said. “While we have a responsibility to respond to developments in Europe, we are not alone.”
However, the dark clouds over the Eurozone economy are at least dissipating. In the three months of 2024, the Eurozone emerged from recession, and economic growth exceeded expectations. The European Commission expects the economy to grow by 0.8% in 2024 as consumer, business and investor confidence grows. Bostjan Vasle said, “The worst quarters of the economy are over. It looks like this year's growth will be better than we expected.”