The ECB has all but promised to cut interest rates on June 6 but some analysts have started reducing their expectations for further reductions after stronger-than-expected wages data last week.
But Cipollone stuck to the ECB’s narrative of a continued, albeit gradual fall in inflation.
“Barring any further shocks, we expect inflation to fluctuate around current levels in the coming months before falling to our target next year,” Cipollone told an event in Trento, Italy.
“Recent data go in that direction and increase our confidence that we will be able to dial back our restrictive monetary policy stance.”
Investors overwhelmingly believe the ECB will cut its policy rate, which currently stands at a record high 4.0%, just twice this year, from three cuts expected only a few weeks ago.
Negotiated pay growth in the euro zone picked up slightly in the first quarter of 2024, ECB figures showed on Thursday, leading some analysts to trim their rate cut bets because higher wages tend to lead to faster price growth.
But the ECB has insisted that wage pressures would decelerate this year and a host of policymakers including Bundesbank President Joachim Nagel and Banque de France governor Francois Villeroy de Galhau have played down the significance of the latest release.
Source: Economy - investing.com
