By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Pablo Hernández de Cos on Sunday said that monetary policy easing could be anticipated to start soon and the month of June would be appropriate to begin. 

In an interview with Spanish daily El Periódico, de Cos, who heads the Banco de España, said, ‘If one takes into consideration the reduction in inflation in recent months (the underlying inflation as well), the weakness of growth in the euro area, the strength of the transmission of monetary policy, and if our macroeconomic forecasts are fulfilled in the coming months, it is normal for us to start reducing rates soon and June could be a good date to start.’ 

Whilst repeating his increased confidence in the ECB’s macroeconomic forecasts, de Cos said that under the high uncertainty, explicit calendar guidance about policy moves should be avoided. 

The forecasts were in line with medium-term price stability, he noted, the risks were balanced and the ECB’s target was now symmetric. 

‘This means that we are equally concerned about deviations, both upwards and downwards, from the target’, he said. ‘That is why it will be very important to properly calibrate the pattern of interest rate cuts in the coming quarters so that we avoid both too little tightening and too much tightening.’ 

The April meeting of the Governing Council would involve a discussion of rate cuts, he said, but the ‘central scenario’ was for one to happen only in June. 

Differences in observers’ views were ‘completely legitimate’, he said. ‘But we have our own view. The important thing is to know how to react depending on how the data are proving you right or wrong and not to anchor unconditionally to any kind of monetary policy path.’