ECB Member Calls for Immediate Rate Adjustment

In a significant statement, 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. Simkus highlighted the importance of transitioning to a less restrictive monetary policy stance in light of recent developments.

Impact of U.S. Tariff Announcement

Simkus pointed out that the recent tariff announcement by the United States serves as a critical reason for adopting a more accommodative monetary policy. He reassured that even after the proposed cut, the rate would remain "at the upper bound of the neutral interval," ensuring a balanced approach to monetary adjustments.

Ruling Out Larger Rate Cuts

Addressing speculation about more aggressive measures, Simkus firmly dismissed the possibility of a 50-point rate decrease, labeling it as "too much." He provided insights into the medium-term outlook, suggesting that escalating trade tensions could have deflationary effects. According to Simkus, the ECB is more likely to either undershoot or meet its targets rather than overshoot them, underlining a cautious yet responsive strategy to global economic shifts.