The European Central Bank is confident of cutting interest rates in June

The European Central Bank (ECB) is confident of cutting interest rates if data for May and June show its monetary policy response remains strong, although it cannot commit to further cuts after that.

The institution’s president, Christine Lagarde, during her participation in an event organized by the Institute for Monetary and Financial Stability in Frankfurt, stressed that in May and June the institution will have much more data to understand whether it is on the right track to achieve the target inflation at 2%.

“If these data show a sufficient degree of consistency between the underlying inflation path and our forecasts, and assuming transmission remains strong, we will be able to move into the review phase of our monetary policy cycle and ease the contractionary stance,” he said.

However, after that there will be a period “during which it will be necessary to continue to confirm that new data support” the ECB’s inflation forecast, while its decisions will continue to be data-driven.

“This means that even after the first rate cut, we will not be able to commit in advance to a specific rate path,” he continued.

To lower interest rates, Lagarde will wait for data on wage growth, which was agreed upon at the end of May, as well as data on inflation.

“We will have more data in the coming months that will help us assess whether we can be reasonably confident about the path ahead as we move into the next stage of our monetary policy cycle,” he said.

The man responsible for European monetary policy believes its future decisions will depend on rising wages, corporate profits and productivity growth.

However, they cannot wait until they have all the information they need, as this may imply the risk of delaying monetary policy adjustment, so they will make a future decision based on the data available in the coming months.

The ECB at its last meeting in early March decided to keep interest rates at 4.5% – the highest level since 2001 – and the credit line, which provides banks with overnight loans, at 4.75% and the deposit line, which rewards excess reserves overnight, at 4.75%. 4%.