ECB’s Šimkus: Likely to Cut Interest Rates More Than Three Times This Year

15 April 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – Interest rates are likely to be cut more than three times in the euro area this year, European Central Bank Governing Council member Gediminas Šimkus said on Monday.

At a press conference at the Bank of Lithuania, which he heads, Šimkus said, ‘There is a more than 50% probability that there will be more than three rate cuts this year’, adding, ‘Three rate cuts is a conservative estimate.’

The period between now and June was not long enough for anything unexpected or very important to happen to the economic trajectory, he said.

‘I see a non-zero probability that an interest rate cut could also be in July’, he said.

According to Šimkus, sufficient conditions were developing for inflation to reach its 2% target in the medium-term with a less restrictive monetary policy, which meant cutting interest rates.

‘The further trajectory of interest rates will depend on the decisions which will be made, including in July’, he said.

The ECB would decide on the interest rate path independently from the US Federal Reserve, he said.

‘I reject the idea that the Eurosystem is taking decisions based on what US policymakers are doing’, he said. ‘There is no connection there.’