Overview of ECB Governing Council Member Comments on Timing of First Rate Cut

26 March 2024

By David Barwick – FRANKFURT (Econostream) – The rhetoric coming from the European Central Bank has for some time been perceived as favouring a first rate cut in June. A closer look at the publicly stated positions of Governing Council members only confirms this impression.

In the following, we reproduce key statements of the nearly three quarters of Council members who have recently expressed a view regarding the timing of the start of monetary policy easing.

That said, policymaker comments fall into somewhat different categories. We have chosen to order them, putting those most clearly eager to get cutting at the top. Then follow those unambiguously pointing to June as the date of the first cut or, as the case may be, as the date when the ECB will at least have sufficient information to decide whether to cut.

Thereafter are those who limit themselves to observing merely that the Governing Council will have a lot more information by June, followed by one or two actual sceptics, both of whom however have also indicated their anticipation of a June move. Finally, seven Governing Council members have refrained, as far as we know, from being as specific as their colleagues on this subject.

It is worth emphasising that the below is not a ranking in a sense meant to suggest that a first rate cut in June is currently a question over which monetary authorities are divided. Rather, barring surprises between now and then, it seems the most likely outcome by a comfortable margin.

Yannis Stournaras (Bank of Greece)
14 March 2024
‘It is appropriate to do two rate cuts before the summer break, and four moves throughout the year seem reasonable.’

Mário Centeno (Banco de Portugal)
22 March 2024
‘And therefore, the best answer is that we have to analyse the wage data, and when we meet at the beginning of April we can make decisions.’

Edward Scicluna (Central Bank of Malta)
22 March 2024
‘So, you could justify why you want to move in April, because you have indications that the downward trend is continuing. So April and June are both evenly balanced.’

Fabio Panetta (Banca d’Italia)
25 March 2024
‘As I noted in a speech last February, inflation in the euro area is falling rapidly and continues to approach the 2% target, making it possible for a rate cut.’

Pablo Hernández de Cos (Banco de España)
17 March 2024
‘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.’

Olli Rehn (Bank of Finland)
16 March 2024
‘My view is that close to summer is the time to start easing the foot off the monetary policy brake.’

François Villeroy de Galhau (Banque de France)
08 March 2024
‘It seems very likely to me that there will be a first rate cut in the spring, I remind you that in Europe, as elsewhere, spring is a season that lasts from April until June 21.’

Klaas Knot (De Nederlandsche Bank)
14 March 2024
‘I have personally pencilled in June for a first rate cut.’

Gabriel Makhlouf (Central Bank of Ireland)
15 March 2024
‘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 less restrictive.’

Gaston Reinesch (Central Bank of Luxembourg)
14 March 2024
‘Provided the incoming data will confirm, in the light of the June 2024 Eurosystem staff macroeconomic projections, the current prospect of inflation returning timely to its 2% medium-term target, it is not at all groundless to anticipate a first rate reduction towards the end of the second quarter of 2024.’

Gediminas Šimkus (Bank of Lithuania)
08 March 2024
‘June is the possible month for a rate cut.’

Luis de Guindos (ECB)
14 March 2024
‘…obviously in June we will have the most complete image and in this case we will be able to make decisions regarding the modification of monetary policy.’

Peter Kažimír (National Bank of Slovakia)
11 March 2024
‘We will learn a bit more in April, but only in June, with new forecast at hand, will the level of confidence reach the threshold.’

Mārtiņš Kazāks (Latvijas Banka)
13 March 2024
‘If the economy will roughly follow the forecast scenario outlined above, then the decision to start lowering interest rates could be made within the next few meetings.’

Madis Müller (Eesti Pank)
08 March 2024
‘It is possible that this sufficient feeling of confidence will already arise based on the economic indicators of the coming months.’

Christine Lagarde (ECB)
07 March 2024
‘We will know a little more in April, but we will know a lot more in June.’

Philip Lane (ECB)
14 March 2024
‘So, we will learn some more by April, we will learn a lot more by June.’

Joachim Nagel (Bundesbank)
22 March 2024
‘And so I believe, as I said, the probability is there that maybe something could happen in June, but I wait and I will see what I will learn from the data from the next meetings.’

Robert Holzmann (Austrian National Bank)
22 March 2024
‘… there are a number of people who believe that developments in June will probably be such that we get to a cut. ... My own assessment is that it could be that way, and if the data are that good, I have no mental reservation against falling interest rates. It’s just that my judgement economically is that inflation may be stickier than a number of people think it is...’

Isabel Schnabel (ECB)

Piero Cipollone (ECB)

Frank Elderson (ECB)

Pierre Wunsch (Belgian National Bank)

Boštjan Vasle (Banka Slovenije)

Boris Vujčić (Croatian National Bank)

Constantinos Herodotou (Central Bank of Cyprus)