News summary
Lagarde hintedspicycasinonodeposit, the growth trend of consumer prices has been contained and interest rates are expected to be cut in June. Markets predict that interest rates may be cut three times this year, but policymakers warn of uncertainty and emphasize acting based on data.
Newsletter text
[The European Central Bank may cut interest rates next month, Lagarde sends a positive signal]
European Central Bank President Christine Lagarde said in a conversation that interest rate cuts will be implemented in June in view of the fact that the upward trend of consumer prices has been effectively curbedspicycasinonodepositThe probability is increased.
Lagarde said that if the data further supports the realization of the medium-term 2% inflation target, expectations of a rate cut on June 6 will be strengthened. She emphasized that the European Central Bank had brought inflation under control and expected future forecasts to be extremely close, if not fully met.
Last month, the European Central Bank chose to maintain the current interest rate level and made it clear that if wage and inflation data remain stable at present, interest rate cuts will become a possible policy choice in the future. By then, early June may become a critical time point for interest rate cuts.
Based on the minutes of the European Central Bank's April meeting, policymakers suggested that the central bank may begin to relax monetary policy restrictions at the June meeting if more evidence obtained before the June meeting is consistent with the medium-term inflation expectations in the March forecast.
The market generally expects that the European Central Bank will cut interest rates up to three times this year, and may further cut interest rates in September and December after June. Despite this, central bank members are conservative about the specific direction of interest rates, and Lagarde also insisted on this position in recent interviews.
Caution after interest rate cuts
Joachim Nagel, governor of the German Central Bank, argued in a recent interview that even if a possible first interest rate cut is implemented, caution should be exercised and the results should not be jeopardized by rushing to cut rates.
Nagel emphasized that even if the first interest rate cut was cut in June, it does not mean that there will be further interest rate cuts in future meetings, and policymakers have not entered a state of automatic interest rate cuts.
Lagarde also expressed concerns about uncertainty and stressed the need to rely on data to make decisions. She pointed out that the policy path after the interest rate cut is difficult to predict and is a collective decision jointly determined by members of the management committee.
Although inflation in the euro zone has slowed significantly, inflation remained stagnant at 2.5 percent in Aprilspicycasinonodeposit4% and is not expected to return to the European Central Bank's 2% target for the next year and a half.
Lagarde made clear her goal of reducing inflation to 2%, saying it was a task she was determined to accomplish.
