ECB could start rate cuts in June: De Cos

THE European Central Bank could start cutting interest rates in June after a reduction in eurozone inflation, ECB policymaker Pablo Hernandez de Cos said in an interview published on Sunday (Mar 17).

The ECB kept borrowing costs at a record high this month but said that it had made good progress in bringing down inflation and has started a preliminary discussion about dialling back monetary tightening.

“If our macroeconomic forecasts are met in the coming months, it is normal that we will start cutting rates soon and June could be a good date to start,” De Cos told Spanish newspaper El Periodico.

De Cos said he believed that differences of opinion within the ECB’s Governing Council on a June rate cut were legitimate but have been relatively limited so far.

“In any case, I believe that the current degree of consensus is very high and I hope this will continue to be the case,” De Cos said.

Having underestimated a sudden surge in prices two years ago, the central bank for the 20 countries sharing the euro has been reluctant to declare victory over what turned out to be the most brutal bout of inflation in decades.

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Asked whether it was reasonable to expect three rate cuts of 25 basis points this year, De Cos did not want to be “very explicit about the time pattern of rates” but said that market conditions were compatible with meeting the ECB’s medium-term inflation target of 2 per cent. REUTERS