Big news about interest rates came out of Europe and infected everyone. European Central Bank Governing Council member Pierre Wünsch said central bankers will eventually have to cut borrowing costs before they are fully confident that inflation is returning to the 2% target.
“We are approaching the moment when we can start to act given the fact that inflation has slowed down and is moving in the right direction,” said the governor of the Belgian central bank, quoted by Bloomberg.
Central bankers are leaning towards an initial cut in the deposit rate from the current record high of 4% in June, although few see easing as early as April.
Governing Council member Martins Kazaks echoed Wünsch’s view, saying that if the economy moves roughly according to the ECB’s forecasts, “then the decision to start easing could be taken within the next few meetings.”
Financial markets expect that the first interest rate cut by 0.25 percentage points will be made already in June, Kazaks said.
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