The European Central Bank has made it “clear” that it may cut interest rates in June, Vice President Luis de Guindos said on Thursday, but also insisted that policy decisions beyond that remained pending. The European Central Bank last week put a June rate cut on the table and strengthened that guidance over the past week, despite rising oil prices, a weaker euro and bets that the Fed will delay a rate cut.
“I think we have been very clear that if things continue as they have been recently, we will be ready in June to reduce the restrictions on the stance of monetary policy,” De Guindos told a parliamentary hearing in Brussels. De Guindos Doss reiterated the ECB’s latest guidance that inflation was 2.4% in March and will hover around current levels in the coming months, but will fall back to the ECB’s 2% target next year.
Markets now expect the central bank to cut its 4% deposit rate by 75 basis points this year, two full cuts after June, but De Guindos declined to say where rates might go, even though some policymakers have floated the idea in July second move.
