ECB more likely to wait until year-end to cut rates, Simkus says
After cutting interest rates seven times in a row as inflation fell, the ECB has hinted at a pause at its next meeting so it can wait for the fog surrounding trade negotiations between the euro zone and the United States to clear.
With these talks still unresolved, Simkus, the Lithuanian central bank governor, said a pause in July was "very likely" and signalled the ECB might be on hold for longer.
"I don't know if we'll have all the information we need by September, but I remain open to every possibility," Simkus said in an interview on the sidelines of the ECB's Forum on Central Banking in Sintra, Portugal.
"I believe a move, if any, is more likely towards the end of the year."
Following the ECB line, Simkus said the central bank would decide "meeting by meeting" and avoid any precommitment given the "unpredictable environment".
"Uncertainty hasn't receded but grown,' he said.
The ECB's June projection showed inflation at the ECB's 2.0% target this year, before dipping to 1.6% the next and returning to 2.0% in 2027.
Simkus said that scenario still held.
"Nothing has fundamentally changed since June," Simkus said. "The September projections may be fairly similar to June's, maybe except the euro is even stronger.'
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