ECB’s Makhlouf: Will Have a Clear Picture for Interest Rate Cut in June

15 March 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Friday said that there would be enough data to support a change to a less restrictive monetary policy stance by the time of the Governing Council meeting in June.

In a blog post on the website of the Central Bank of Ireland, which he heads, Makhlouf said, ‘My current view is that the picture should be sufficiently clearer when the Governing Council meets in June (as we will have a lot more information – particularly on wage dynamics – available in our deliberations) to give us sufficient confidence to make monetary [policy] less restrictive.’

The disinflation process was developing well, and there was ‘scope for a change’ to a less restrictive monetary policy stance, he said, emphasising that he remained open-minded about when it should happen.

Domestic inflation remained high, partially due to wage growth pressing services, he said, and it was ‘an area we will continue to monitor closely’.

It was necessary to manage a certain level of uncertainty, as ‘waiting for clear and unambiguous evidence is also not realistic’, he said.

‘As I have emphasised before, while our data-dependent approach allows us to make informed and timely policy decisions, it also means having an open mind on the rate path, including the need to hold for longer, should progress on returning inflation sustainably to target be threatened by further shocks, or wage growth turns out to be inconsistent with achieving 2% inflation over the medium-term’, he said.