MNI BRIEF: ECB Members Saw Cost Of Cutting Too Little-Accounts

The few European Central Bank officials in favour of an interest rate cut in the last Governing Council meeting argued that the balance of risks for inflation have shifted and the cost of undershooting “in terms of declining activity” is now at least high as that of acting too early, April policy meeting accounts showed on Friday.

These dissenters noted that since the last hike in September 2023, the “decline in expected inflation had implied a further tightening” with real rates close to the peak and that the reduction of the balance sheet was having a contractionary impact on the economy.

However, a broad majority of the council agreed on waiting for more data in June. It was seen as “plausible” that the ECB “would be in a position to start easing monetary policy restriction at the June meeting” if additional evidence supported the inflation outlook of the March projections.