Rates, ECB ready to cut: “more clearly visible” date

“It's starting to be more clearly visible the date for a first rate cut c” and “the arguments in favor of a cut they are getting stronger.” It is one of the passages in the minutes of the ECB Governing Council of 6-7 Marchor, who however adds that on that date the governors had “consensus on the fact that it would be premature to discuss a tgarlic of the badgers on this occasion”. “Patience and caution are still necessary” regarding the decline in inflation.

Rates, ECB “sees” a cut

All members of the Board of Directors of European Central Bank (ECB) they agreed with chief economist Philip Lane's proposal to keep three key interest rates unchanged, and they did consensus that it would be “premature to discuss rate cuts during the current meeting.” This is what emerges from the minutes of the meeting on March 6-7during which it was “instead stated that it was important to advance the disinflation process further and accumulate further evidence for the Governing Council to be sufficiently confident that inflation would return to the target level in a timely and sustainable manner”.

Date more clearly visible

It was highlighted that, in addition to the new staff projections, the Governing Council will have much more data and information will be available by the June meetingespecially on wage dynamics. “Doubts remain about the sustainability of the disinflationary process, particularly in services and domestic inflation, due to the uncertain outlook for wage growth, productivity growth and profit margins”.

The scissors are ready

In the euro area “the conditions to initiate monetary easing” by the ECB. This was stated by the governor of the Bank of Italy, Fabio Panetta, “The global economy continues to be weak. The stagnation of international trade and the uncertainty raised by geopolitical tensions weigh on economic activity,” he continued. “The restrictive monetary policy of the European Central Bank is squeezing demand and contributing, together with the fall in energy prices, to the rapid decrease in inflation. The risks to price stability have reduced – Panetta further observed – and yes the conditions are creating to initiate monetary easing.”

Powell waiting

Meanwhile, the Federal Reserve it is not in such a hurry to cut rates and needs more evidence of slowing prices before cutting them. The Fed “has time to decide” on possible cuts and wants to have greater confidence in the downward trajectory of inflation before reducing the cost of money – the President said in recent hours Powell – adding that given the strength of the economy and the progress made so far on inflation, “we have timeor to let incoming economic data guide our decisions.” If the economy evolves “as we expect, most Fed members probably think it is appropriate a tax cutia a certain point this year.”