ECB's Simkus 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. He highlighted the importance of transitioning to a less restrictive monetary stance in light of recent economic developments.

Impact of U.S. Tariffs on ECB's Decision

Simkus pointed out that the recent tariff announcement by the United States justifies a more accommodative monetary policy. He reassured that even after the proposed cut, the interest rate would remain within the upper limit of the neutral range.

Why a 50-Point Cut Is Off the Table

Addressing speculation about a more significant rate reduction, Simkus dismissed the possibility of a 50-point cut, labeling it as excessive. He also shared his medium-term outlook, suggesting that escalating trade tensions could lead to deflationary pressures, with the ECB more likely to meet or fall short of its targets rather than exceed them.