News Digest:

With inflation in the Euro Zone appearing set to fall back to 2% next year, the European Central Bank (ECB) is reportedly preparing to start cutting benchmark rates in June. Policymakers had left the rates unchanged in April but clarified that a cut is very likely on June 6.

Of course, there is the usual caveat of wage and inflation rates staying on their current benign path, reports Reuters while noting that the Governing Council could be in a position to start easing monetary policy restrictions by June. ECB had considered a rate revision in April but stayed put awaiting more wage and price data to come in.

Takeaway:

ECB President Christine Lagarde argued that rates will restrict the economy even after the initial cuts, which means past tightening will continue to work through the economy. Analysts now expect the first of the rate cuts in June and two more thereafter – one in September and the next one in December.

End Notes

Source: https://www.reuters.com/markets/europe/ecb-preparing-june-rate-cut-accounts-show-2024-05-10/