ECB's next rate cut an easy decision before choices become hard, Wunsch says
Bank's next interest rate cut is still a relatively easy decision, but subsequent moves should only come once inflation is clearly heading towards the 2% target, ECB policymaker Pierre Wunsch said in an interview.
The ECB cut rates in early June but made no commitment about any further moves, arguing inflation was still too high and it lacked the confidence that 2% was within reach.
Wunsch already said at the time that the first two cuts were easy decisions and continues to maintain this view despite more recent figures showing stubborn wages and services price growth.
«If we have no major negative surprises, then based on our forecasts, I would say there is room for a second cut,» Wunsch, Belgium's central bank governor told Reuters on Monday. «A small deviation from the projections would not change this view dramatically.»
But even this second cut was not urgent, he said, and the ECB could wait until its next projections are due out in September.
«There is probably a premium in waiting for a meeting with new forecasts that confirm the picture but I would not make that a condition,» Wunsch said.
Inflation is expected to have slowed to 2.5% last month from 2.6% in May, but the ECB sees a «bumpy» path ahead with figures oscillating around current levels for the rest of the year.
This could make it hard to cut again until figures start showing a more decisive move towards 2%.
«To continue with cuts, I would need to have some more comfort that we really are going down from 2.5% inflation to something which is
