ECB Governing Council member Klaas Knot has indicated there is no case for another rate cut in July. In an interview with Handelsblatt, Knot stated, “I don’t see a case for another rate cut in July.” He emphasized that the next ECB meeting that will consider rate adjustments will be in September.
Knot expressed satisfaction with ECB’s progress in reducing inflation, projecting that 2% target will be achieved by late 2025. However, he warned against tolerating further delays, noting that inflation will have exceeded ECB’s target for four and a half years by that time.
Market expectations suggest between one and two rate cuts this year and just over four cuts over the next 18 months. This implies that the deposit rate would remain above 3% into the second half of next year. K
not commented on this outlook, saying, “As long as we are above 3%, we are still restrictive. And that will be the case for the foreseeable future, beyond which I cannot make meaningful statements.”
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