Sat. Jul 20th, 2024

Lane of the ECB says he is ready to cut interest rates, FT reports

By Vaseline May27,2024

(Reuters) – European Central Bank’s Philip Lane said the ECB is ready to cut interest rates from next week, the Financial Times reported on Monday, ahead of the June 6 policy meeting.

“Barring any major surprises, there is enough in what we are seeing at the moment to lift the highest level of restrictions,” Lane told the FT in an interview.

Lane said ECB policymakers needed to keep rates in restrictive territory this year to ensure inflation continued to decline and not rise above the bank’s target, which would be “very problematic and probably quite painful to eliminate.” ”.

He said the pace at which the central bank cuts borrowing costs in the eurozone this year will be determined by assessing data to determine whether this is safe and proportionate.

The ECB has all but promised to cut rates on June 6, but some analysts have started to revise their expectations for further cuts after stronger-than-expected payroll data.

Negotiated wage growth in the eurozone rose slightly in the first quarter of 2024, strengthening the case for caution in cutting rates from record highs.

However, Lane said that “the overall direction of wages still points to a slowdown, which is essential.”

“The best way to frame the debate this year is that we need to be restrictive all year round,” Lane said. “But within the zone of restrictiveness we can go down a bit.”

(Reporting by Jahnavi Nidumolu in Bengaluru; Editing by Muralikumar Anantharaman and Shri Navaratnam)

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