ECB's Simkus Calls for Immediate Rate Cut

European Central Bank (ECB) Governing Council member Gediminas Simkus emphasized the necessity of a 25 basis points interest rate cut during this month's meeting. He highlighted the importance of transitioning to a less restrictive monetary policy stance in light of recent economic developments.

Impact of U.S. Tariff Announcement

Simkus pointed out that the recent tariff announcement by the United States justifies a more accommodative monetary policy approach. Despite the proposed cut, he reassured that the interest rate would remain at the upper bound of the neutral interval, ensuring stability.

Ruling Out a Larger Cut

Addressing speculations, Simkus firmly dismissed the possibility of a 50-point rate decrease, labeling it as "too much". He also shared his medium-term outlook, suggesting that escalating trade tensions might have a deflationary effect, with the ECB more likely to undershoot or meet its targets rather than overshoot.