© Reuters. FILE PHOTO: A view of the European Central Bank (ECB) headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker/File Photo
FRANKFURT (Reuters) -European Central Bank policymakers continued to line up behind a June interest rate cut but on Thursday offered contrasting views on the timing and pace of further moves, suggesting there is no consensus yet within the Governing Council.
ECB President Christine Lagarde put an initial move on the table last week, most likely in June, and the fresh comments suggest policymakers have already started looking further ahead.
Klaas Knot, the influential head of the Dutch central bank, said he currently anticipated three cuts in 2024, slightly fewer than financial markets are pricing in.
“Personally I pencilled in June for a first rate cut,” Knot told a media briefing. “Where will we take it from there? We are data dependent, so I would focus on those meetings in which we have most data available, which are the meetings in which we have new projections, so September and December.”
He said the ECB could still cut more but his “prime inclination” was to focus on meetings with new projections.
Greek central bank chief Yannis Stournaras meanwhile told Bloomberg he backed a second move as soon as July, with two more by the end of the year.
Markets are currently pricing in 93 basis points of cuts this year, so nearly four full moves, suggesting they are leaning somewhat closer to the timeline suggested by Stournaras.
Sources told Reuters last week some policymakers had floated the idea of successive moves in June and July, partly as a compromise with a small number of policymakers still seeking a cut in April.
ECB chief economist Philip Lane, one of the most influential voices on the ECB’s Governing Council, also appeared to back a move by June but cautioned against making predictions about what will happen later.
“I think that Q2 is a time when we will be far enough into 2024 to see more of the wage dynamic to see more of the price pressures,” he told CNBC.
On the timing of a first cut, Lane repeated ECB President Christine Lagarde’s comment that the ECB “will learn some more by April …(and) a lot more by June” and added that he wouldn’t “overanalyse” the merits of moving at one meeting or the other.
But Lane warned against venturing further into the future.
“We have to go decision by decision and, for me, I don’t think I should look beyond the next meeting or two,” he said.
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