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. Highlighting the need for a less restrictive monetary stance, Simkus pointed to the recent U.S. tariff announcements as a critical factor influencing this decision.

Why a 50-Point Cut is Off the Table

Simkus firmly dismissed the idea of a more aggressive 50-point reduction, stating it would be "too much." He elaborated that even after the proposed cut, rates would remain at the upper bound of the neutral interval, ensuring the ECB's policy remains balanced.

Trade Tensions and Deflationary Risks

Looking ahead, Simkus expressed concerns over escalating trade tensions potentially leading to deflationary pressures. He assessed the ECB's inflation targets, suggesting the bank is more likely to undershoot or meet its goals rather than exceed them, underscoring the delicate balance the ECB must maintain in its policy decisions.