ICYMI – ECB’s Kazaks warns Bank shouldn’t switch to “autopilot” in cutting interest rates

European Central Bank Governing Council member Kazaks (governor of Latvia’s central bank) spoke with MNI (gated) and Bloomberg (also gated). Via the Bloomberg report:

ECB shouldn’t switch to “autopilot” in cutting interest rates

• dependence on incoming economic data is “still key”
• “Wages-productivity-profit margins to watch carefully”

Kazaks says he is “fine” with current market pricing for 2 cuts this year:

• “As recession risks fade, barring a major surprise, the ‘insurance’ rate hike of September 2023 may now be reversed”

On divergence from Federal Reserve:

• “Large interest rate differntial might lead to EUR depreciation, but the disinflationary impact of rate hikes > inflationary impact of EUR depreciation”

This article was written by Eamonn Sheridan at www.forexlive.com.