ECB Board of Governors member Peter Casimir said on Monday that the ECB is increasingly confident that inflation will fall, but it should postpone interest rate cuts until June.
His statements were as follows:-
- Rushing to move is neither smart nor useful.
- The upward risks of inflation still exist.
- We need more solid evidence of inflation expectations.
- We will reach the threshold of confidence in this matter only in June.
- Confidence is gradually increasing that inflation will return to the 2% target next year, but wage pressures remain very high, despite the noticeable slowdown.
- As soon as interest rates start to fall, we prefer a smooth and steady cycle of monetary easing. This reaffirms the current market expectations.
If everything goes according to plan, the ECB should announce its intention to switch in April. This will be followed by the first interest rate cut in June. The odds of a move in April are almost 13% with June fully priced in at the moment.
The markets are also now pricing in four interest rate cuts this year, with the first move coming in June, suggesting that investors are betting on the move at all but one meeting between June and December.
