ECB’s de Cos: Central Scenario is for First Rate Cut in June

3 April 2024

By David Barwick – FRANKFURT (Econostream) – The European Central Bank is likely to start easing monetary policy in June, ECB Governing Council member Pablo Hernández de Cos said Wednesday.

In a colloquium in Barcelona, de Cos, who heads Banco de España, said, ‘Next week we will have to have a discussion in which we will share all our visions about what has happened since the last meeting, and we will see what the conclusion is, but I believe as of today that the central scenario is that June could indeed be the first reduction of interest rates, provided ... this is compatible with those macroeconomic forecasts.’

The March euro area inflation data released today were ‘positive’ and, more importantly, in line with the ECB’s projections, he said. The decline of inflation encompassed underlying measures and was ‘very significant’, he said.

The ECB had become more confident about its forecasts and these, if anything, overstated inflationary pressures, as seen again with today’s data for March, which were ‘slightly better than what we anticipated’, he said.

‘We also have a lot of information that … monetary policy... is being strongly transmitted to financing and credit conditions in all countries in the euro area’, he said. ‘That confidence that we have gained in the macroeconomic forecasts … makes us optimistic about the ability to achieve the ECB's inflation objective.’