2024-04-24 13:52:01
ECB Vice President Luis de Guindos. Photo: Alex Kraus/BloombergWe hear more and more often regarding the June date for the first one Lowering interest rates in the eurozone. Also head of the ECB Christine Lagarde talked last week that this might happen soon. Now the deputy chairman of the ECB, Luis de Guindos, adds today that the central bank is well on its way to cutting interest rates at its June meeting.
“If things go in the same direction as in recent weeks, we will relax our restrictive monetary policy in June” (cut interest rates), he said in an interview with Le Monde published today, according to Bloomberg. “If there are no surprises by then, it is, as they say in French, a ‘fait accompli.’
Luis de Guindos’ statements are in line with the general consensus on the start of the reduction in interest rates (current policy rate 4.5%, deposit rate 4.0%, see development since 2001 in the diagram). What happens following June is more controversial. The ECHB vice-president cited inflation in the service sector, greater price pressure in the US, the geopolitical situation and its possible impact on oil prices as risks.
“The level of uncertainty makes it very difficult to say anything,” he said, according to one copy on the ECB’s website. “I already mentioned June. As for what happens following that, I’m very careful.”
Guindos also said:
“Unit labor costs are still rising. But I think we’re moving in the right direction and will see some productivity gains.”
“The decisions of US Federal Reserve (FMW: Higher interest rates probably for a long time) is crucial not only for the US, but also for the global economy, which also affects the euro area.
“The Euro-US dollar exchange rate may be one of the channels through which the impact manifests itself. We do not have an exchange rate target, but we have to take into account the impact of exchange rate fluctuations.”
“Early indicators in Europe point to a modest recovery in the second half of 2024. But we will have a growth rate of less than 1%, below our potential, which is a very low result.”
FMW/Bloomberg
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