In the accounts from their April monetary policy meeting, ECB confirmed that it is “plausible” to be in a position to start cutting interest rates as early as June, contingent upon incoming evidence supporting the medium-term inflation forecasts established in March.
ECB members collectively noted that recent data largely upheld the projections made by staff in March, bolstering their “confidence that the disinflationary process was continuing”.
Looking forward, ECB highlighted the importance of upcoming data releases and new staff projections, which are expected before the June meeting. These forthcoming insights will provide a more “comprehensive” basis for decision-making, enabling a fuller assessment of the economic environment and potentially justifying a shift in policy.
BoE’s Pill cautions against overemphasis on June rate cut
BoE Chief Economist Huw Pill today advised against fixating on the possibility of an interest rate cut in the upcoming June meeting, describing such expectations as “probably a little bit ill-advised.”
Pill clarified that a rate reduction next month is not a “fait accompli,” tempering expectations that have been building around BoE’s short-term monetary policy trajectory.
Pill elaborated that the MPC has indeed signaled that the bank rate could be reduced, but only upon receiving sufficient evidence that the persistent components of inflation are on a clear downward path.