In a statement today, ECB Governing Council member Peter Kazimir highlighted his preference delivering the first rate cut in June. Emphasizing the persistent nature of upside inflation risks, Kazimir pointed to factors such as workers’ pay, energy prices, fiscal policy, and the green transition as ongoing concerns that necessitate caution.

Kazimir’s stance is clear: “Rushing isn’t smart and beneficial,” he remarked, underlining the jeopardy to ECB’s credibility from a hasty policy adjustment.

According to him, “Only in June, with new forecast at hand, will the level of confidence reach the threshold.”

Also, he advocates for a “smooth and steady cycle of policy easing,” suggesting that the decision-making process should be grounded in comprehensive and up-to-date economic forecasts.

“Upside inflation risks are alive and kicking,” he asserted, emphasizing the need for vigilance. “The current picture clearly favors staying calm for the coming weeks and delivering the first-rate cut in summer,” he said. “The slowdown in inflation remains fragile — we can’t take it for granted.”

Several ECB policymakers vocalized today their anticipation of impending rate cuts, pinpointing spring—likely June—as the probable period for the first reduction.

Governing Council member Francois Villeroy de Galhau, in an interview with BFM Business television, conveyed a “very probable” outlook for an inaugural rate cut within the spring months. Villeroy indicated there is “large consensus” among officials on the inevitability of rate reductions, albeit with ongoing discussions about the precise timing. He elaborated on the spring timeframe, suggesting it encompasses April to June, thus leaving a window open for an earlier adjustment.

Further adding to the conversation, Governing Council member Gediminas Šimkus acknowledged the prevailing conditions that pave the way for a shift to a less restrictive monetary stance. While not dismissing an April rate cut entirely, Šimkus posited a low likelihood for such an early move, aligning more with expectations for action in the subsequent months.

Compounding these sentiments, another Governing Council member Olli Rehn, expressed his viewpoint through a blog post. Rehn’s assessment, grounded in the latest forecasts, indicates that “the risks of too early a decrease in interest rates from the perspective of inflation control have significantly decreased,”

ECB keeps interest rates unchanged as widely expected, with main refinancing rate at 4.50%, marginal lending facility rate at 4.75%, and deposit facility rate at 4.00%. The central maintained the language that current inflation will contribute substantially to bring inflation down to target, given that it’s maintained for sufficiently long duration. Future decisions will remain data-dependent.

In the new economic projections, both headline and core inflation forecasts are revised down reflecting lower contribution from energy prices. Inflation is estimated to average 2.3% in 2024, 2.0% in 2025, and 1.9% in 2026. Core inflation is expected to average 2.6% in 2025, 2.1% in 2025, and then 2.0% in 2026.

Growth projection for 2025 was downgraded to 0.6% as economic activity is expected to remain subdued in the near term. Thereafter the economy is expected to pick up and grow at 2.5% in 2025, 1.6% in 2026.

Full ECB statement here.