MNI BRIEF: Market Pricing Compatible With 2% Target -De Cos
The Spanish central bank chief welcomes lower-than-expected flash inflation data.
Flash March inflation data published is "positive and compatible" with the European Central Bank’s March projections, Bank of Spain Governor Pablo Hernandez de Cos said on Wednesday, adding that market pricing for interest rate cuts is also compatible with a returning to the 2% inflation target level in 2025.
"That does not mean that we give an explicit orientation, but it could help the market and the citizens to anticipate what will happen with interest rates," Hernandez de Cos said, adding that while the flash data was lower than expected June is still the "central scenario" for the first ECB rate cut of the cycle. (See MNI SOURCES: ECB Cut Expectations Range From 50-100BP In 2024)
Minimal forecasting errors in the past few months have made ECB policymakers recover confidence in their forecasts, Hernandez de Cos said, adding that inflation has been overestimated in the past few months.