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Knot – ECB Must Take Cautious Approach After Likely June Cut

ECB
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ECB’s Knot, one of the more hawkish members on the Governing Council, tells Nikkei that the ECB “will have to take a cautious approach” after a June cut.

  • He adds that it’s “too early” to comment on meetings beyond June although this is a similar message to last month.
  • The US inflation experience shows the need for vigilance, whilst quarterly wage data will be key to helping adjust policy as there needs to be “quite an ambitious deceleration in unit labor costs” first.
  • The ECB is targeting a sustainable convergence toward 2% and “it may well be only in the course of 2025 that this condition can be established.”
  • His comments add to a range of ECB speakers suggesting agreement for a June cut but uncertainty thereafter.
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ECB’s Knot, one of the more hawkish members on the Governing Council, tells Nikkei that the ECB “will have to take a cautious approach” after a June cut.

  • He adds that it’s “too early” to comment on meetings beyond June although this is a similar message to last month.
  • The US inflation experience shows the need for vigilance, whilst quarterly wage data will be key to helping adjust policy as there needs to be “quite an ambitious deceleration in unit labor costs” first.
  • The ECB is targeting a sustainable convergence toward 2% and “it may well be only in the course of 2025 that this condition can be established.”
  • His comments add to a range of ECB speakers suggesting agreement for a June cut but uncertainty thereafter.