MNI BRIEF: Must ‘Take Bet’ On Inflation Before Rate Cut-Wunsch
BNB head says ECB will likely need to act on rates before it has full comfort in wage dynamics.
The ECB will not be in a position to have “full comfort” that wage growth is slowing before it has to start cutting rates and will, at that point, have to take 'a bet' on where inflation is going, Belgian National Bank Governor and ECB Governing Council Member Pierre Wunsch said Thursday.
Speaking at a Bruegel event in Brussels , Wunsch said "I think there is some value to get some more data on wages, but at some point we are going to have to bet on where inflation is going and we won’t have full comfort on where inflation is going before we start cutting rates." (see MNI INTERVIEW: Beware Temporary Inflation Dip- ECB's Kazaks)
Financial markets are now fully pricing the first ECB rate cut for June, although they still see an outside chance of a 25 bps cut in April. (see MNI INTERVIEW: ECB Could Cut In April Or June- Simkus)