ECB Member Calls for Monetary Policy Adjustment

Gediminas Simkus, a member of the European Central Bank (ECB) Governing Council, 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 announcement as a key factor.

Neutral Rate Still Within Reach

Despite the proposed cut, Simkus reassured that the interest rate would remain "at the upper bound of the neutral interval," ensuring the ECB's policy remains balanced. He dismissed the idea of a 50-point decrease, labeling it as excessive.

Trade Tensions and Deflationary Risks

Looking ahead, Simkus expressed concerns over escalating trade tensions potentially leading to deflationary pressures. He projected that the ECB is more likely to either undershoot or meet its targets, rather than overshoot, in the medium term.