The ECB is considering a rate cut in June, warns the head of the Bundesbank

Joachim Nagel predicts a reduction in the ECB's key rate in June, despite risks to the euro

Joachim Nagel
Joachim Nagel / INSM, CC BY-ND 2.0 DEED

Joachim Nagel, who holds the position of head of the Bundesbank and is a member of the ECB's Governing Council, expressed his opinion on Friday about the increased chances of a reduction in the European Central Bank's key interest rate in the near future.

According to his forecasts, it is most likely that the rate will be reduced in June, rather than at the upcoming meeting in April.

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This opinion coincides with positions previously voiced by ECB President Christine Lagarde and other leading representatives of the bank.

Nagel also emphasized that one should not expect that the first reduction will be followed by consecutive decreases in the rate, and warned against too rapidly reducing borrowing costs.

He mentioned that not everything may go smoothly until the end of the year.

Furthermore, Nagel pointed out the possibility of the euro weakening against the US dollar and the risk of inflation rising in the event of an ECB rate cut, even if the Federal Reserve does not take similar measures.

Earlier, in anticipation of a rapid fall in inflation below 2%, the Bank of England decided to keep the interest rate at 5.25%.

Also, in line with market expectations and aimed at reducing inflation while simultaneously supporting employment, the Federal Reserve (Fed) decided to leave the key rate unchanged at 5.25-5.5%.

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