European Central Bank Governing Council member Kazaks (governor of Latvia’s central bank) spoke with MNI (gated) and Bloomberg (also gated). Via the Bloomberg report:

ECB shouldn’t switch to “autopilot” in cutting interest rates

• dependence on incoming economic data is “still key”
• “Wages-productivity-profit margins to watch carefully”

Kazaks says he is “fine” with current market pricing for 2 cuts this year:

• “As recession risks fade, barring a major surprise, the ‘insurance’ rate hike of September 2023 may now be reversed”

On divergence from Federal Reserve:

• “Large interest rate differntial might lead to EUR depreciation, but the disinflationary impact of rate hikes > inflationary impact of EUR depreciation”

This article was written by Eamonn Sheridan at www.forexlive.com.



Source link