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MNI SOURCES: ECB Needs Sub-3% Core Inflation To Consider Cuts

(MNI) London

Core inflation has to continue to slide for the ECB to consider cuts by the first quarter, sources say.

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The European Central Bank will need to see a consistent fall in core inflation below 3% before it considers rate cuts, officials told MNI, with several in broad agreement with market pricing for the first cuts by the end of the first quarter.

“The first thing you have to see is an appropriate projection horizon, and the second is that underlying inflation is going below 3% consistently", one official said, adding that wage increases should remain modest and energy prices and the exchange rate relatively stable.

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The European Central Bank will need to see a consistent fall in core inflation below 3% before it considers rate cuts, officials told MNI, with several in broad agreement with market pricing for the first cuts by the end of the first quarter.

“The first thing you have to see is an appropriate projection horizon, and the second is that underlying inflation is going below 3% consistently", one official said, adding that wage increases should remain modest and energy prices and the exchange rate relatively stable.

Keep reading...Show less