FRANKFURT (Reuters) – Members of the Governing Council of the European Central Bank still plan to cut interest rates in June but some of them believe that a pause is then possible in July given the rebound in inflation in the United States, three sources told Reuters.
Wage indicators are trending well, growth is weak and inflation has fallen in the euro zone, which justifies a rate cut in June, members of the Governing Council said after their meeting on Thursday, at the end of which the ECB has maintained its rates at their current levels.
However, the rebound in inflation in the United States, announced on Wednesday, has “shaken” some monetary policy makers, according to one of the sources, which makes the continuation of the easing process more uncertain.
The July meeting was not discussed Thursday but some members of the Board of Governors argued that a possible postponement of the Federal Reserve’s first rate cuts should encourage caution, according to the sources.
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Reuters interlocutors believe that the ECB may not lower rates in July until it is confident in the trajectory of US monetary policy.
An ECB spokesperson declined to comment.
(Reporting Francesco Canepa, Balazs Koranyi Frank Siebelt, French version Corentin Chappron)
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