Martins Kazaks News

European Central Bank cuts interest rates in the first half of next year would be a mistake, according to Governing Council member Martins Kazaks. Wage growth in the euro zone hasn't yet peaked and it's unclear how quickly underlying inflation will retreat, the head of Latvia's central bank said. Last week's decision to lift borrowing costs for a 10th straight time puts the ECB more solidly on track to reach its 2% target in 2025, but it's too soon to exclude another hike. “The market shouldn't expect that we would jump too early to cut rates,” Kazaks said in an interview. “We'll start cutting rates when we see that we consistently and significantly start to undershoot our target, and what I can say clearly is that expectations of a rate cut in spring or early summer in my view are not really consistent with the macro scenario that we have.” Traders are starting to price cuts from April of next year and some economists see them as early as June. Projections presented last week show that inflation in the 20-member euro area will take another two years to reach 2%, even as price pressures are set to slow sharply in the coming months. The economy is seen returning to quarterly growth rates of 0.4% in 2024 after stagnating for most of 2023.

By Francesco Canepa and John O'Donnell

European Central Bank will lower borrowing costs in the spring, with June more likely than April for a first move, Bank of France Governor Francois Villeroy de Galhau said. “We will probably cut rates in spring, and spring in Europe is from April to June 21," Villeroy said on France Info radio.

FRANKFURT (Reuters) -Euro zone inflation is stubbornly high with upside risks, so the European Central Bank's next move could still be a rate increase before cuts come onto the agenda, several policymakers said on Thursday.

The European Central Bank could end its stimulus programme earlier than planned but it is unlikely to raise its main interest rate in July as investors are expecting, ECB policymaker Martins Kazaks told Reuters.