logo
ECB more likely to wait until year-end to cut rates, Simkus says

ECB more likely to wait until year-end to cut rates, Simkus says

Reuters30-06-2025
SINTRA, Portugal, June 30 (Reuters) - The European Central Bank may not have all the information it needs, including on the trade outlook, by September, making any interest rate cut more likely to come later in the year, ECB policymaker Gediminas Šimkus told Reuters.
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.'
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump hits ‘too late' Jerome Powell as Federal Reserve keeps interest rates steady despite two board dissenters
Trump hits ‘too late' Jerome Powell as Federal Reserve keeps interest rates steady despite two board dissenters

The Independent

time24 minutes ago

  • The Independent

Trump hits ‘too late' Jerome Powell as Federal Reserve keeps interest rates steady despite two board dissenters

President Donald Trump on Wednesday continued his attacks on Federal Reserve Board of Governors chair Jerome Powell as the American central bank again rebuffed his demand for lower interest rates, keeping them steady for at least another month. Speaking in the Roosevelt Room during a bill signing ceremony, the president hit out at Powell, who he has blamed for decisions made by the bank's powerful Open Markets Committee, using the derisive nickname he assigned him when he began to demand lower rates months earlier. 'We should be the lowest interest rate. And we're not. We're ... number 38 because of the Fed. It's all because of the Fed. He's done a bad job. Now. He's got a meeting today, but I call him too late. You know, he's always too late, even if he does it today, probably won't. I hear they're going to do it in September, not today,' Trump said. In a statement, the bank justified the decision to keep rates steady by noting that while employment and economic growth remain steady after Trump's first half-year in office, the rate of inflation remains "somewhat elevated." Powell offered some further explanation during remarks announcing the decision in which he stressed that Trump's "reciprocal tariffs" have led to some increased inflation around goods, the long-term economic effects of tariffs remain to be seen. The Fed's decision to keep interest rates stagnant comes the same day that the Bureau of Economic Analysis released its report showing that GDP grew by 3 percent in the last economic quarter between April and June. This came after the previous quarter where GDP actually shrank, which Trump blamed on his predecessor Joe Biden. The decision comes after weeks of bullying and browbeating of Powell by Trump and his allies, including top officials at the Office of Management and Budget and the Federal Housing Finance Administration, who have seized on long-running renovations at the Fed's headquarters as a possible pretext under which Trump would fire Powell, who he appointed to lead the Fed during his first term.

VIEW FOMC holds steady, but two dissenters wanted cuts
VIEW FOMC holds steady, but two dissenters wanted cuts

Reuters

time25 minutes ago

  • Reuters

VIEW FOMC holds steady, but two dissenters wanted cuts

July 30 (Reuters) - The Federal Reserve held interest rates steady on Wednesday in a split decision that gave little indication of when borrowing costs might be lowered and drew dissents from two of the U.S. central bank's governors, both appointees of President Donald Trump who agree with him that monetary policy is too tight. The Federal Open Market Committee voted 9-2 to keep its benchmark overnight interest rate steady in the 4.25%-4.50% range for the fifth consecutive meeting. The policy statement did note that economic growth "moderated in the first half of the year," possibly bolstering the case to lower rates at a future meeting should that trend continue. But it also said that "uncertainty about the economic outlook remains elevated." This week's meeting marks the first time in more than 30 years that two members of the Fed's seven-person Washington-based Board of Governors, Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, voted against a rate decision at the consensus-driven central bank. Waller has been mentioned as a possible nominee to replace Fed Chair Jerome Powell when his term expires next May. MARKET REACTION: STOCKS: The S&P 500 (.SPX), opens new tab pared a slight gain to +0.19% BONDS: The yield on benchmark U.S. 10-year notes ticked a bit lower but was still up 2.4 bp on the day at 4.352%FOREX: The dollar index gained and was last up 0.55% COMMENTS: TOM GRAFF, CHIEF INVESTMENT OFFICER, FACET, PHOENIX, MARYLAND: 'As expected, the Fed took no formal action at today's meeting. However, the Fed is clearly in a tricky position. The Fed logically expects some amount of inflation to stem from newly implemented tariffs. Ideally, they would wait until after inflation peaks to consider cutting. 'However, the pressure is building. Even if the White House weren't applying external pressure, the recent softness in the labor market has the Fed worried. Indeed, this is presumably why Christopher Waller and Michelle Bowman dissented this meeting, preferring to cut rates. 'I believe this sets up the Fed to cut at the September meeting, and probably 1-2 times more before year-end. It may be a tricky communications job, cutting rates even though prices will probably be rising. The communications challenge is made worse by Trump's cajoling over rates. It may look like Powell is caving to Trump's demands. But if job growth continues to flag, a recession becomes more and more likely. Powell won't be able to ignore that for too much longer.' CHRISTOPHER HODGE, CHIEF US ECONOMIST, NATIXIS , NEW YORK: 'The dissents were notable, but well-previewed and do not represent a broader fracturing on the committee. If a third vote went along with Bowman and Waller, that would have been significant. I actually don't think there is much disagreement on the economics between Waller and the rest of the FOMC. All would agree that tariffs won't pass through one for one and that their effect is likely to be transitory. The disagreement is political - Waller assumes certainty on trade policy sooner rather than later and the majority looks at the now six month rolling threats of tariffs and aren't so sure about that'

White House warns Starmer: Stop threatening US tech companies' free speech
White House warns Starmer: Stop threatening US tech companies' free speech

Telegraph

time25 minutes ago

  • Telegraph

White House warns Starmer: Stop threatening US tech companies' free speech

The White House has warned Sir Keir Starmer to stop threatening American tech companies amid mounting backlash over Britain's online safety law. Members of Donald Trump's administration are monitoring the Online Safety Act with 'great interest and concern' after key allies said it was censoring free speech and imposing unfair burdens on US businesses. The law, which regulates online speech, allows the British government to levy massive fines on companies like Apple, Truth Social, and X if it finds that rules on hate speech have been broken. Those in the president's inner circle see the potential penalties as an unwarranted foreign intervention into American free speech. 'President Trump has made it clear that free speech is one of our most cherished freedoms as Americans,' a senior US State Department official told The Telegraph. 'Accordingly, we have taken decisive action against foreign actors who have engaged in extraterritorial censorship affecting our companies and fellow citizens. 'We will continue to monitor developments in the UK with great interest and concern.' Since the law came into effect last week, Ofcom, the UK's online regulator, has written to several American firms ordering them to conform to the act, in letters seen by The Telegraph. It has sparked outrage from US lawmakers and legal experts, who say the overreach is a threat by the UK to silence American companies and citizens. Congressman Jim Jordan, chair of the House Judiciary GOP committee, said the law was an attack on American companies. 'Ask Apple and they would view it as a $500 million attack,' he told The Telegraph. 'There's general concern... and then there's concern on how this impacts American citizens, American companies and infringes on our First Amendment. 'As long as foreign legislators, judges, and regulators continue their attempts to silence US citizens, we will not stop fighting back.' Mr Jordan also raised concerns over the bill's overreach with Peter Kyle, the Science Secretary, on Wednesday. Under the law, social media giants face fines of up to £18m ($24m), or 10 per cent of their annual revenue, if they fail to remove content deemed harmful from their platforms. While the measures are designed to protect young people from dangerous content, critics argue that it pressures platforms into censoring users by removing their content if it is disliked by others, even though it is perfectly legal. Social media apps such as X, Reddit and TikTok have been forced to introduce age verification checks since the bill came into effect last week. The warning to Sir Keir is the latest sign of Donald Trump's willingness to intervene in domestic British affairs amid a growing transatlantic rift over the protection of freedom of speech. During his meeting with the Prime Minister in Scotland, Mr Trump warned Sir Keir not to censor his social-media platform, Truth Social. 'Well, I don't think he's going to censor my site, because I say only good things,' Mr Trump said. In May, The Telegraph revealed that the president sent US officials to meet British pro-life activists over censorship concerns. The diplomats from the Bureau of Democracy, Human Rights and Labour (BDHL) travelled to London in March in an effort to 'affirm the importance of freedom of expression in the UK and across Europe'. Led by Samuel Samson, a senior adviser in the state department, they met with officials from the Foreign Office and challenged Ofcom over the Online Safety Act. Since then, the Trump administration has also raised questions about the conviction and sentencing of several high profile cases like that of Lucy Connolly. Connolly, a former childminder and the wife of a Conservative councillor, is currently serving a two-and-a-half-year jail sentence over a social media post published in the wake of the killings of three girls in Southport. After rumours spread online online that the killer was an illegal migrant, Connolly called for 'deportation now' and added: 'Set fire to all the... [asylum] hotels... for all I care'. Three Court of Appeal judges rejected the 42-year-old's case application last week, meaning she will not be released before August. And no case has raised concerns in Washington more than the prosecution of Livia Tossici-Bolt, an anti-abortion campaigner. The 64-year-old was handed a two-year conditional discharge and ordered to pay £20,026 ($26,624) in costs for breaching a buffer zone while praying outside an abortion clinic. At the time, the case threatened to jeopardise Sir Keir's trade deal with the United States. In a highly unusual intervention, the State Department's BDHL posted a statement on X saying: 'We are monitoring [Ms Tossici-Bolt's] case. It is important that the UK respect and protect freedom of expression.' Ms Tossici-Bolt, who could have been handed a prison sentence, thanked the Trump administration for its intervention. Those closest to the president have long raised concerns about the erosion of free speech in Britain. In a speech at the Munich security conference in February, JD Vance, the US vice-president, cited British pro-life campaigner Adam Smith-Connor, who too was convicted for breaching a buffer zone outside an abortion clinic. 'Free speech in Britain and across Europe [is] in retreat,' Mr Vance said. Before his spectacular fallout with the president, Elon Musk was understood to be pushing Mr Trump to raise curbs on social media regulation in trade talks with the UK. Mr Musk, who has described himself as a free speech absolutist, said Britain's online safety laws amount to 'suppression of the people'. Several American businesses are now poised to bring a federal lawsuit against Ofcom. Preston Byrne, managing partner of Byrne & Storm, PC who is representing some of the US sites, said no foreign power should be allowed to 'cross our waterline'. 'I am instructed by multiple American websites to bring a federal lawsuit against Ofcom,' he said. 'No matter who is the target, the US free speech bar will not allow any American to be censored by a foreign government. No foreign power will be allowed to cross our waterline with unconstitutional and illegal orders.'

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store