The statements of ECB board member Gediminas Simkus on Monday were as follows
- Monetary policy will clearly move towards a less restrictive position.
- The outcome of the December meeting cannot be predicted.
- Risks to economic growth are skewed towards the negative side.
- Inflation in services remains high.
- But the deflationary trend is on a stable path even if services inflation remains high.
- A reduction in prices is possible if deflation takes root.
- He sees no need for interest rate cuts of more than 25 basis points.
The European Central Bank made cuts of 25 basis points in both September and October
Traders have factored in a 25 basis point interest rate cut for December with about 118 basis points of rate cuts priced in until June next year.
However, there is a probability of a more significant reduction of 50 basis points with a probability of almost 30%.
Last week, the European Central Bank cut interest rates for the third time this year, citing better control over inflation but deteriorating economic prospects for the eurozone, ECB President Christine Lagarde's statements were interpreted as a downgrade of economic forecasts.
