ECB policymakers more confident about cutting rates
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The news: The European Central Bank is growing more confident about cutting interest rates as euro zone inflation continues to ease, several of its policymakers have said.
The numbers: Eurozone inflation stood at 2.4% in April and a crucial indicator of underlying price pressures slowed while the economy staged a small rebound. The ECB’s rate on bank deposits currently stands at a record 4%, a level that most policymakers describe as restrictive — or curbing economic activity.
The context: ECB chief economist Philip Lane, Lithuania's central bank governor Gediminas Simkus and Croatian governor Boris Vujcic said separately that the latest inflation and growth data cemented their belief that inflation will head back to the central bank's 2% target by the middle of next year.
The ECB has all but promised a rate cut on June 6 and money markets are almost fully pricing in three cuts this year, with traders boosting their bets after some dovish rhetoric by the Federal Reserve and weak US jobs data late last week.
While the ECB insists it is not dependent on the Fed, a widening interest rate gap between the world's biggest central banks would weaken the euro and boost European inflation, likely limiting the ECB's appetite for going it alone.
The source: Reuters
