BRUSSELS, March 27 (Reuters) – The monetary policy of the European Central Bank (ECB) will remain “very restrictive” even in the event of a reduction in its key rates, Piero Cipollone, member of the board of the monetary institution, said on Wednesday.
“We are so far from a neutral monetary policy that even if we adjust it, we will remain very restrictive,” he said at an event in Brussels.
Piero Cipollone nevertheless said the ECB was increasingly convinced that inflation would converge towards the 2% target by mid-2025 due to slowing wage growth, strengthening the case for of a drop in rates.
“Wage growth appears on track to gradually moderate over the medium term and reach levels consistent with our inflation target and productivity growth, as projected,” he said.
Investors expect the ECB to cut rates in June, but are divided on the pace of monetary easing expected before the end of the year. (Reporting Jan Strupczewski, written by Francesco Canepa; French version Diana Mandiá, editing by Claude Chendjou)
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