FRANKFURT, 20th May, 2024 (WAM) -- The pace of European Central Bank interest-rate cuts must match the gradual slowdown of euro-area inflation, Bloomberg quoted Governing Council member Martins Kazaks as saying on Monday.
June seems the right moment to start lowering borrowing costs, but decisions on any subsequent steps are best determined by incoming data, the Latvian official told Bloomberg Adria in an interview.
“The baseline scenario shows that we are gradually approaching our 2 percent target, which will of course mean gradually we can also start reducing the rates,” Kazaks said. “This process needs to be cautious, gradual, and we should not rush.”
Policymakers from across the region have left little doubt that June will be the first in a series of rate cuts aimed at removing some of the restriction needed to bring inflation back from above 10 percent. They have offered few clues about their strategy thereafter, with Executive Board member Isabel Schnabel a lone voice in arguing for a pause in July.
“From today’s perspective, it is quite likely June is going to be the time when we start the rate cuts,” Kazaks said. “After June, going forward,” he added, “let us see again the data.”
The ECB’s approach of looking at the numbers and then taking decisions on a meeting-to-meeting basis has been “an appropriate one so far,” he said. “Given still high uncertainty, very clear forward guidance is not a good policy solution at the moment.”