FRANKFURT (Reuters) – Monetary policy makers at the head of the European Central Bank (ECB) are increasingly confident that inflation will return to the 2% target, calling for cuts in rate, according to the minutes published Thursday of the ECB’s latest monetary policy meeting.
During the March 6-7 meeting, the ECB kept rates at a record low, while paving the way for easing in June.
“The members (of the board of governors) said they were more confident in the return of inflation to its target of 2% in the long term,” it is indicated in the report.
“While it is wise to wait for new data, it seems increasingly relevant to consider rate cuts,” it is also specified.
The latest data published in the euro zone showed that inflation continued to decline and wage pressures moderated, while activity indicators suggest that the European economy is starting to recover, after six quarters of sluggish growth.
The next ECB meeting will be held on April 11, and the central bank could stick to the timetable for a cut in June, with several monetary policy makers having spoken in favor of such a date.
However, the institution should refrain from specifying the timetable for successive cuts, even though the markets are betting on 88 basis points of easing in 2024, or three to four rate cuts.
The Federal Reserve is the main factor of uncertainty: too great a divergence in monetary policy would weaken the euro and European assets, limiting the economic impact of rate cuts.
Markets are betting on rate cuts in the United States this summer.
(Report by Balazs Koranyi, French version Corentin Chappron, edited by Blandine Hénault)
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