The president of the Federal Bank of Germany estimated on Friday that a first rate cut in the euro zone is likely in June but without automatism for the future, echoing the words of ECB President Christine Lagarde.
As inflation continues to fall in the euro zone, the likelihood increases that we will see rates fall before the summer break, Joachim Nagel told an online conference.
Does this mean that there will be a sequence of rate cuts? I don’t see a sort of automatism there, he added, faithful to his restrictive positions on monetary policy.
This does not mean that the next meeting there will be another rate cut, he insisted.
The rate on deposits, which serves as a reference, has been at its highest since October, 4%.
The ECB is under pressure to begin a cycle of lowering its rates which are at a record level after the unprecedented series of increases launched since July 2022 to combat the surge in prices.
ECB officials, however, want to see how three key indicators will evolve – wage increases, corporate margins and increased productivity – to ensure that inflation is heading towards the 2% target in the medium term. .
However, according to Mr. Nagel, uncertainty remains regarding the evolution of several indicators for the rest of the year.
The price of gasoline is below the level of 12 months ago, but there is no certainty that this is something very stable, said the central banker, who admits to checking the prices every morning. energy prices.
Mr. Nagel’s comments echo those of Ms. Lagarde, who suggested on Wednesday that rates could fall for the first time in June, but without committing in advance to a particular rate trajectory which will be decided during the meetings. .
In March, a panel of analysts surveyed by the ECB forecast a rate on deposits reduced to 2.25% in seven decided cuts by the end of 2025.