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 to counteract the potential deflationary effects of escalating trade tensions.

Impact of US Tariff Announcements

Simkus pointed out that the recent tariff announcements by the United States justify a more accommodative monetary policy. Despite the proposed cut, he reassured that the interest rate would remain within the upper bound of the neutral interval, ensuring a balanced approach to monetary policy.

Ruling Out a 50-Point Decrease

Addressing speculations, Simkus firmly dismissed the possibility of a 50-point rate decrease, labeling it as excessive. He projected that, in the medium term, the ECB is more likely to either undershoot or meet its inflation target rather than overshoot, given the current economic climate.