ECB’s Wunsch warns of risk of “sleepwalking” into too many rate cuts

• I’m not pleading for a pause in April
• But we must not “sleepwalk” to cutting rates to 2% without thinking about it
• If the data justify a rate cut, we will cut
• If it doesn’t, then we might have to pause
• I think the risks on the downside and upside for inflation are relatively limited
• Inflation in Europe might be the boring part of this year; and it’s not going to be a boring year
• ECB is tasked with fine-tuning policy around a soft landing now
• Full transcript

All that being said, he reaffirms the existing market path as he says he is “relatively comfortable” with expectation for rates to move to 2% by year-end. He does provide a bit of a buffer to that though, expecting said pricing but “give or take 50 bps”.

This article was written by Justin Low at www.forexlive.com.