ECB’s Müller: ‘June May Already Be the Right Time to Cut Interest Rates’

12 April 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Madis Müller on Friday said that the disinflationary process was increasing the Governing Council’s confidence that it could cut interest rates in June.

In a statement published on the website of the Estonian central bank, which he heads, Müller said, ‘The ever-decelerating general price increase in the euro area increases the likelihood that the European Central Bank Council meeting in early June may already be the right time to cut interest rates.’

Since the last monetary policy decision, the news on the euro area’s economic outlook hadn’t been surprising, he said, which was good news and a ‘sign that there have been no major upheavals.’

‘The price increase continues to slow down and there are more and more signs that the euro area economy as a whole is gathering vitality’, he said.

Services inflation was still high, he noted, adding that this was the reason why the ECB monitored wage growth.

‘Before we decide to cut interest rates, we would like to see further confirmation for both the increase in the price of services and the increase in average wages that the downward trend in both indicators will continue’, he said.

It was likely that the further decline in inflation would be less smooth and uniform, he said.

‘Therefore, we should not be surprised if in some months the price increase temporarily accelerates in a year-on-year comparison’, he said.