Lagarde signals Eurozone interest rate drop in June

The President of the European Central Bank, Christine Lagarde, has hinted at the possibility of a rate cut in June, citing the need for more data on the economy and inflation in the Eurozone. This comes after the ECB confirmed market expectations by keeping rates unchanged for the fifth consecutive session at a record low of 4%.

Lagarde emphasized the easing inflation and the need to monitor risks but refrained from providing guidance on future rate movements. While inflation indicators are trending lower and wage increases are moderating, pressures remain in the services sector, she noted.

There's speculation on whether the ECB's stance will be influenced by the Federal Reserve's approach, particularly due to higher inflation in the US. Lagarde maintained a cautious stance, highlighting differences between the Eurozone and the US economies.

Regarding the potential impact on the euro-dollar exchange rate and inflation, Lagarde stated that all data would be considered. In March, Eurozone inflation slowed to 2.4%, nearing the ECB's target of 2%, while the US saw a rise to 3.5%, potentially leading to an interest rate cut by the Fed in September.

Despite these considerations, Lagarde reiterated the ECB's commitment to its current monetary policy, aiming to support the ongoing inflation moderation process. Future decisions will ensure that policy rates remain sufficiently accommodative for as long as necessary.

[With information sourced from Money Review GR]