The European Central Bank is “on track” to cut key interest rates at its June meeting, according to ECB Vice President Luis de Guindos.
“If things move in the same direction as in recent weeks, we will loosen our restrictive monetary policy in June,” he said in an interview today with the French publication Le Monde. “If we assume there will be no surprises between now and the meeting in June, it will be, as they say in French, ‘fait accompli,'” he pointed out.
Luis de Guindos noted at the same time that “the level of uncertainty makes it very uncertain what we will do in the future. I already mentioned June. As for what happens after that, I tend to be very cautious.”
The ECB vice-president points out that “Eurozone labor costs per unit of output are still rising, but I think we are going in the right direction and we will see some productivity gains”.
“What the Federal Reserve decides on key US interest rates is critical not just for the United States, but for the global economy, and it also affects the eurozone,” Luis de Guindos noted on the growing likelihood that the Fed to delay the first rate cut in the US.
Regarding economic development, De Guindos told the French publication that “leading indicators in Europe point to a moderate recovery in the second half of 2024, but we will achieve a growth rate of less than 1%, which is below our potential and is short”.
The vice-president of the ECB also commented that “the euro/US dollar exchange rate can be one of the “channels” through which it can have an impact due to the possible differences in the interest policies of the ECB and the Fed. Therefore, the ECB should take into account the impact of the movements of the exchange rate in making decisions.”
When will the ECB start lowering the main interest rates, according to analysts
This year, inflation in the euro area will not reach the target level of an average of 2%
