Home Economy News ECB’s Kazaks ‘comfortable’ with market bets on three rate cuts this year

ECB’s Kazaks ‘comfortable’ with market bets on three rate cuts this year


ECB’s Kazaks ‘comfortable’ with market bets on three rate cuts this year By Reuters

Breaking News



Published Mar 19, 2024 12:52PM ET
Updated Mar 19, 2024 12:57PM ET

© Reuters. Latvian central bank governor Martins Kazaks adresses economic conference in Riga, Latvia November 3, 2022. REUTERS/Ints Kalnins/File Photo

By Francesco Canepa and John O’Donnell

FRANKFURT (Reuters) – European Central Bank policymaker Martins Kazaks said on Tuesday he was “comfortable” with investor bets on three interest rate cuts by the central bank by the end of the year.

Many ECB policymakers have expressed support for a first reduction in borrowing costs from their current record highs, most likely in June, with the debate now focused on how many more cuts would follow.

Money markets are pencilling in three cuts by December with some chance of a fourth, which would lower the 4% rate the ECB pays on bank deposits to 3.25% or 3.0%.

Kazaks, who in the past resisted speculation about imminent rate reduction, told Reuters this time market pricing was in line with the ECB’s own economic projections, which see inflation closing in on its 2% target by end of the year.

“If I take a look at the current market pricing, for the last month or so, I’m quite comfortable with that,” the Latvian governor said in an interview on Tuesday.

Kazaks, however, cautioned his words should not be taken as a commitment, or “forward guidance” in central bank parlance.

“I will not provide forward guidance saying there will be three cuts because we’ll take a look at each meeting,” he said.

The ECB will hold policy meetings on April 11, June 6, July 18, Sept 12, Oct 17 and Dec 12.

Kazaks said moving at meetings at which new forecasts are published — that is in June, September and December — was “more straightforward”, echoing his Dutch colleague Klaas Knot.

By contrast, Greek central bank governor Yannis Stournaras said two cuts before the ECB’s summer break in August seemed reasonable, followed by two more by the end of the year.

Kazaks stressed there was a difference between cutting rates three or four times but, with the policy rate now at 4%, there was still a long way to go before the ECB’s policy was no longer restrictive.

“Even if we start reducing the rate it’s going to take some time before we get the neutral rate,” he said. “By reducing the rate we only reduce the tightness of monetary policy, but it will remain restrictive.”

ECB’s Kazaks ‘comfortable’ with market bets on three rate cuts this year

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News