ECB sources: We heard from Lagarde. What about the others? Expect to cut in June still.

ECB sources, via Reuters, say

  • Policymakers still expect to cut rates in June but some think the case for pausing at their following meeting is becoming stronger given a continued rebound in US inflation.
  • Doves are looking for cuts in June and July amid benign labour market conditions.
  • While the July decision was not explicitly debated, some policymakers argued that a delayed start to the Fed’s own cutting cycle warranted caution from the ECB.
  • Policymakers note that every wage indicator is pointing in the right direction, growth is weak, and inflation has clearly ceded, warranting a cut in the record high 4% deposit rate.
  • The path further ahead had become more uncertain for some after the stronger-than-expected US CPI, which had “shaken” some policymakers and played an important part in Thursday’s discussion.
  • Others insisted that the US was in a very different position to the euro zone both in terms of the economic cycle and of the fiscal stance.

This article was written by Greg Michalowski at Source