Banque de France Governor François Villeroy de Galhau said it was very likely that the European Central Bank (ECB) would start cutting interest rates at its June 6 board meeting.
Speaking at a conference in Paris, French policymakers said recent data on inflation were encouraging and supported the ECB's commitment to permanently return annual price increases to 2% by next year. Ta.
“We have enough confidence to probably start cutting rates soon,” Villeroy told the International Finance Association summit. “There is a strong possibility that a rate cut will occur before the next meeting on June 6th.”
His comments are in line with other rate-setters at the ECB who are on board to start easing policy at the next Governing Council meeting.
Meanwhile, the regulator's deputy president Luis Deguindos said that although salary increases in the euro zone were slowing, the ECB could not commit to a path to lower interest rates due to heightened uncertainty.
“Wages are slowing down,” Guindos said. “A few months ago, wage growth was over 5%, but now it's hovering around 4%.''
The comments shed further light on the trajectory of wage growth in the 20-country region and are a key indicator as ECB officials consider how much to ease monetary policy after next month's first rate cut. .
Data from the region's biggest economy suggested that bargained wage growth did not slow significantly in the first quarter. Some analysts even see inflation accelerating as companies pass on rising costs to consumers, with the risk of inflation remaining above 2% for an extended period.
Speaking after the publication of the ECB's bi-annual Financial Stability Review, Guindos said salaries were not the only concern, and also highlighted the interaction between pay and productivity.
“Productivity is very low, which causes a very significant increase in unit labor costs,” he said. “This is a particularly sensitive issue for services because they are labor-intensive and the evolution of unit labor costs will determine a significant portion of the price pressures we will see in the near term.”
Elsewhere, the benchmark S&P 500 and the tech-heavy Nasdaq rose modestly on Thursday, hitting record highs a day after weak inflation data raised hopes that the Federal Reserve, the U.S. banking regulator, would announce an interest rate cut. has been updated.
A smaller-than-expected rise in consumer inflation boosted optimism that inflation is easing after three months of high readings, with all three major indexes moving ahead. The transaction reached a record closing price.
Markets are again betting on two quarter-point rate cuts by the Federal Reserve this year, with traders seeing a 72.6% chance of the first cut in September, according to the CME FedWatch tool. .
“At these levels, the market needs to take a breather and rest,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
“So we're moving closer to a level of consolidation, although it's very likely not today, with some rebound and some sideways movement.”
Oil futures rose on Thursday, supported by slower-than-expected inflation and a stable U.S. job market, pointing to positive signs for future interest rate cuts.
Bloomberg and Reuters reporting