Francois Villeroy de Galhau, Bank of France Governor and ECB Governing Council member, said that more and more ECB policymakers believe that interest rates will be lowered before the end of the 2nd quarter.
"Although a broad consensus was reached on the overall risk assessment, which indicates the first rate cut, the exact timing was still a 'secondary issue' among policymakers," he added, and confirmed yesterday's statements by ECB President Lagarde, who hinted that a rate cut would most likely occur at the June meeting, and not in April. The ECB has monetary policy decisions scheduled for April 11, June 6 and July 18. After that it doesn’t meet again until Sept. 12.
"Now we have more and more confidence that inflation will return to the target level (2%) between now and next year. But we need to avoid two pitfalls. There is a broad consensus on an early rate cut, which, in other words, means a broad consensus in favor of gradualism," Villeroy de Galhau said.
Meanwhile, Olli Rehn, Governor of the Bank of Finland and member of the Governing Council of the ECB, said today that the risk that the European Central Bank will rush to cut interest rates too early has decreased. He added that the Governing Council had begun discussing the appropriate timing of monetary policy easing.