In a recent statement, Martins Kazaks, a member of the European Central Bank's Governing Council, suggested that with inflation retreating, June could be an opportune moment for the ECB to start reducing borrowing costs. This aligns with current market expectations.
Kazaks expressed caution due to the high level of uncertainty, emphasizing the importance of preventing a resurgence in inflation. However, he noted that inflation appears to be under control for now, describing it as "pinned to the ground."
Regarding the possibility of an interest rate cut, Kazaks mentioned, "Financial markets are pricing in that it could be in June and I don’t have any objection at the moment to that." He further elaborated that inflation rates are low across the eurozone and are expected to continue falling.
The approach to lowering rates will be cautious and gradual, with close monitoring of the economy's response. Additionally, Kazaks highlighted the normalization of wage growth in the eurozone as a positive development.
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