The Zhitong Finance App learned that ECB Governing Council Member Martins Kazaks (Martins Kazaks) emphasized that the pace of interest rate cuts in the Eurozone should keep pace with the gradual slowdown in inflation. In a recent interview, the Latvian governor indicated that June may be the best time to start reducing borrowing costs. But at the same time, he stressed that any further interest rate cut decisions should be made based on the latest data.

“Our benchmark forecast shows that we are gradually approaching the 2% inflation target, which means we can also start gradually reducing interest rates,” Hazax said. At the same time, he cautioned that this process needs to be carried out carefully, and there is no rush to achieve results.

Eurozone policymakers generally believe that the June interest rate cut will be the first step in a series of interest rate cuts aimed at reversing previous measures taken to deal with inflation of more than 10%. Despite this, they didn't provide much clue about the follow-up strategy; only Executive Committee member Isabel Schnabel (Isabel Schnabel) made a separate proposal to suspend interest rate cuts in July.

Among them, Bank of Slovenia Governor Bostjan Vasle (Bostjan Vasle) said on Friday that starting to cut interest rates in June may be the right time, and he is open to future actions. In the interview, he mentioned that although the labor market is still strong, there has been no excessive wage growth, and the inflation data is in line with expectations. Vasley expressed satisfaction with the ECB's current data-dependent decision-making method.

Furthermore, Bank of France Governor Francois Villeroy de Galhau (Francois Villeroy de Galhau) also said that the ECB is likely to start cutting interest rates at the June policy meeting. In an interview on Wednesday, he said that unless something unexpected happens, the ECB is still committed to reducing the inflation rate from 2.4% now to the 2% target next year. “We are confident enough to start lowering interest rates at the policy meeting in early June,” Villeroy said.

As the inflation rate gradually approaches the 2% target, the market generally expects the ECB to cut interest rates at the June policy meeting and cut interest rates further every quarter when the economic forecast is updated. Investors expect the ECB to cut interest rates three times before the end of the year. However, policymakers also warned that potential shocks — geopolitical factors in particular — could change this expectation.

However, Isabel Schnabel (Isabel Schnabel) sent the clearest signal so far on Friday, indicating that the ECB is unlikely to cut interest rates again in July after cutting interest rates in June. She said a second rate cut “doesn't seem necessary.”

“From the current point of view, June is probably the time when we start cutting interest rates,” Hazax concluded. He added, “As for the situation after June, let's review the data again.”

Hazaks believes that it is appropriate for the ECB to make decisions based on data before each meeting. He pointed out that in the current highly uncertain environment, providing very clear forward-looking guidance is not a good policy choice.