ECB Member Calls for Less Restrictive Monetary Policy

Gediminas Simkus, a member of the European Central Bank's (ECB) Governing Council, emphasized the need for a 25 basis points interest rate cut in April's meeting. He highlighted the necessity for the ECB to adopt a less restrictive stance, especially in light of recent trade tensions sparked by the United States' tariff announcement.

Why a 50-Point Cut is Off the Table

Simkus dismissed the possibility of a more aggressive 50-point rate decrease, labeling it as "too much." He reassured that even after the proposed cut, rates would remain at the upper bound of the neutral interval, ensuring a balanced approach to monetary policy.

Looking Ahead: Trade Tensions and Inflation

Addressing the medium-term outlook, Simkus expressed concerns that escalating trade tensions could have a deflationary impact. He predicted that the ECB is more likely to either undershoot or meet its inflation target, rather than overshooting it, underscoring the delicate balance the central bank must maintain in these uncertain times.