ECB's Schnabel Suggests June Rate Cut Could Be Warranted, but Path Forward Highly Uncertain

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ECB's Schnabel Suggests June Rate Cut Could Be Warranted, but Path Forward Highly Uncertain
European Central Bank Governing Council member Isabel Schnabel stated that the pace of economic growth in the eurozone has picked up somewhat in recent times, which contributes to the optimism that the region's economy has moved past the most severe phase of its recent downturn.


"If our forecasts for inflation and the newest economic figures align with our present assessment, it would be probable that we lower interest rates in June," she remarked. "We must proceed with prudence and closely scrutinize the data over time to determine if inflation does not materialize as we presently anticipate."

The European Central Bank (ECB) is likely to decrease its key interest rate by a quarter of a percentage point if it chooses to reduce borrowing costs in June, according to ECB Vice President Luis De Guindos.

The ECB has signaled that it will probably cut its key rate next month if the economic data aligns with its projections. However, in an interview published on Thursday, De Guindos stated that the initial move would be a reduction from 4% to 3.75%.

Investors anticipate seeing as many as two to three additional cuts in the interest rate this year, but De Guindos said policymakers did not have a clear understanding of the likely path. He expressed, "There is a huge degree of uncertainty. We have made no decisions on the number of interest rate cuts or their size. We will see how the economic data evolves."

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