On Wednesday, Joachim Nagel, a policymaker at the European Central Bank, stated that a rate reduction for the institution appears to be becoming more probable for June. However, he also noted that certain components of the incoming inflation data still seem to be higher than desirable.
"Underlying inflation remains elevated, while price pressures in the service sector are also elevated. At the June policy meeting, we will receive our updated economic projections, including our latest forecasts. If there is confirmation that inflation is indeed moderating and that we are on track to meet our target in 2025, as I have mentioned, the likelihood is increasing that a rate cut will be implemented at the June meeting," Nagel stated.
Earlier Wednesday, Mario Centeno, the governor of the Bank of Portugal, stated that it was "high time to shift this monetary policy cycle." Centeno noted the deceleration in inflation but also reaffirmed that the European Central Bank's (ECB) main policy-making body would base its decisions on the available data. Centeno described the ECB's June interest rate decision as "very significant."
On Thursday, the European Central Bank (ECB) opted to maintain its benchmark interest rates at their current levels, marking the fifth consecutive policy meeting where no changes were made. Additionally, the central bank adjusted its rhetoric regarding potential future rate cuts, indicating that such a reduction would be deemed appropriate if the ECB felt assured that inflation was returning to its 2% objective.
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