The ECB still believes that inflation has been mitigated to the point where interest rates can be cut in June, and the market should not overinterpret wage data.
The Zhitong Finance App learned that ECB Management Committee and Bank of France Governor Francois Villeroy de Galhau (Francois Villeroy de Galhau) said that the ECB still believes that inflation has been mitigated to the point where interest rates can be cut in June, and the market should not overinterpret salary data.
Data released earlier on Thursday showed that wages in the Eurozone did not slow in early 2024, which sounded a wake-up call for expectations that price increases would definitely fall back.
Villeroy said that due to a one-off incident, “Germany is an exception,” while wage growth in other countries has clearly slowed.
Villeroy said: “We should not overinterpret it; we remain confident in the anti-inflation process.”
Outsiders generally expect that the ECB will start cutting interest rates within two weeks. This is the first time since this act curbed uncontrolled inflation and raised interest rates continuously. Although consumer price increases have clearly slowed, policymakers said that a return to the 2% target depends on the interaction between wages, corporate profits, and productivity.
Villeroy said, “As our confidence in inflation grows, we are likely to cut interest rates for the first time at the next Management Committee meeting unless something unexpected happens.”