Economic news

ECB has room for gradual rate cuts, Kazaks says

2024.08.23 01:32

JACKSON HOLE, Wyoming (Reuters) – The European Central Bank has room to cut interest rates possibly two more times this year as inflation remains broadly on the declining path policymakers envisaged, ECB policymaker Martins Kazaks said. 

The ECB cut rates for the first time after a record string of hikes in June and markets expect a second move on Sept. 12 as economic growth remains anemic and wage pressures ease, supporting the argument that inflation will fall back to the 2% target next year.

When asked if he would advocate a cut already in September, Kazaks said inflation is largely where the ECB expected it to be, so the case for gradual policy easing is intact.

“We are broadly along the baseline of our projections and that is consistent with a gradual decline in interest rates,” Kazaks, Latvia’s central bank governor, told Reuters on the sidelines of the U.S. Federal Reserve’s Jackson Hole Economic Symposium. 

“Our June projections assumed two more rate cuts this year and right now I don’t see any reason why we shouldn’t follow through,” he said, adding that he would make up his mind about September only after August inflation figures are published and he saw the ECB’s new projections.

While some recent inflation prints have surprised on the upside, Kazaks said that focusing on single numbers risked missing the forest for the trees. 

He argued that broader trends in the economy are consistent with easing price pressures and that should eventually translate into lower inflation readings.

“Our projections already assumed relatively quick wage growth and we had numbers this week showing an easing of these wage pressures, so that also supports a gradual easing path,” Kazaks said. “Corporate profit margins are also declining.”

Growth in negotiated wages, a key number on the ECB’s radar, slowed to 3.6% in the second quarter from 4.7% three months earlier and economists already said this solidified the case for a September rate cut.

© Reuters. The building of the European Central Bank (ECB) is seen amid a fog before the monthly news conference following the ECB's monetary policy meeting in Frankfurt, Germany December 15, 2022.  REUTERS/Wolfgang Rattay/File Photo

But Kazaks was also clear that the ECB should not tolerate any further slippage in the date when it met its inflation target, given copious delays already.

“I will become concerned if our projections show that getting back to the 2% target is pushed out into 2026,” he said. “We now expect to get there by the end of 2025 and it’s been pushed back far enough.”   



Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 96,848.95 2.03%
ethereum
Ethereum (ETH) $ 3,299.51 4.88%
tether
Tether (USDT) $ 1.00 0.11%
solana
Solana (SOL) $ 245.64 5.94%
bnb
BNB (BNB) $ 645.37 4.26%
xrp
XRP (XRP) $ 1.35 13.87%
dogecoin
Dogecoin (DOGE) $ 0.409168 12.10%
usd-coin
USDC (USDC) $ 0.999454 0.17%
cardano
Cardano (ADA) $ 0.980725 11.59%
staked-ether
Lido Staked Ether (STETH) $ 3,301.87 4.69%
tron
TRON (TRX) $ 0.20328 8.50%
avalanche-2
Avalanche (AVAX) $ 39.66 7.38%
stellar
Stellar (XLM) $ 0.50839 10.41%
the-open-network
Toncoin (TON) $ 5.95 2.13%
shiba-inu
Shiba Inu (SHIB) $ 0.000025 10.34%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,930.31 3.99%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 96,565.87 1.53%
polkadot
Polkadot (DOT) $ 8.59 5.00%
chainlink
Chainlink (LINK) $ 16.52 5.70%
bitcoin-cash
Bitcoin Cash (BCH) $ 487.71 10.00%
weth
WETH (WETH) $ 3,297.03 4.89%
sui
Sui (SUI) $ 3.25 10.44%
pepe
Pepe (PEPE) $ 0.000019 11.66%
leo-token
LEO Token (LEO) $ 8.71 0.92%
near
NEAR Protocol (NEAR) $ 6.25 2.13%
litecoin
Litecoin (LTC) $ 94.04 8.79%
aptos
Aptos (APT) $ 11.82 8.76%
uniswap
Uniswap (UNI) $ 10.34 4.06%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,491.15 3.88%
hedera-hashgraph
Hedera (HBAR) $ 0.140704 6.79%
usds
USDS (USDS) $ 1.00 0.08%
internet-computer
Internet Computer (ICP) $ 10.68 7.92%
crypto-com-chain
Cronos (CRO) $ 0.184032 9.63%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.537201 6.85%
ethereum-classic
Ethereum Classic (ETC) $ 27.72 9.67%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.20%
render-token
Render (RENDER) $ 7.38 7.48%
kaspa
Kaspa (KAS) $ 0.147474 8.41%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.43 0.47%
bittensor
Bittensor (TAO) $ 495.29 8.56%
whitebit
WhiteBIT Coin (WBT) $ 24.40 1.22%
dai
Dai (DAI) $ 0.999886 0.19%
celestia
Celestia (TIA) $ 7.90 22.86%
arbitrum
Arbitrum (ARB) $ 0.813741 6.79%
bonk
Bonk (BONK) $ 0.000044 14.34%
mantra-dao
MANTRA (OM) $ 3.66 3.82%
cosmos
Cosmos Hub (ATOM) $ 8.36 2.04%
vechain
VeChain (VET) $ 0.040189 8.61%
filecoin
Filecoin (FIL) $ 5.35 0.88%
okb
OKB (OKB) $ 52.51 2.30%