Reviewing the European Central Bank's (ECB) monetary policy announcements following the April meeting, Rabobank analysts noted that the ECB gave some strong hints that there will be a reduction in the policy rate in June.
Reviewing the European Central Bank's monetary policy announcements following the April meeting, Rabobank analysts noted that the ECB gave some strong hints that there will be a reduction in the policy rate in June. ECB is now more concerned of falling behind the curve Although persistent price pressures in services remain somewhat of a concern, this doesn’t appear to be in the way of a first cut at the next policy meeting.
As we explain here, the Council seems to have made up its mind now that i) the data have continued to move in the right direction and that ii) a few cuts would still keep policy sufficiently restrictive so as to not derail the disinflation process. Despite its mantra of ‘data dependence’ and inflation not having reached its target yet, the Council seems pretty convinced that a cut would be appropriate.
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