The European Central Bank is expected to implement one more interest rate cut in June before pausing further reductions, Bank of Greece Governor Yannis Stournaras and Finnish central bank chief Olli Rehn have told Kathimerini.
“I believe we will reduce interest rates one more time in June and then I see a pause,” Stournaras said.
As he has emphasized repeatedly, the ECB’s approach will remain data-driven, with decisions made on a meeting-by-meeting basis due to prevailing uncertainty. “No major steps can be taken, or big promises made,” Stournaras noted.
This cautious stance is increasingly resonating within the ECB and among international analysts, especially as inflation risks persist. Rising trade barriers and increased defense and infrastructure spending across the eurozone are expected to put upward pressure on prices.
While eurozone inflation edged slightly above expectations in April to 2.2%, it is forecast to decline in May. Some economists even anticipate it could dip below the ECB’s 2% target.
However, with the labor market still tight and inflation expectations rising in recent surveys – two indicators closely watched by the ECB – officials are likely to halt rate cuts after June to reassess conditions. The duration of the pause will depend on how the data evolves.
Echoing Stournaras’ outlook, Rehn, the Finnish central bank governor, told Kathimerini: “We are applying data-driven thinking. So, if incoming data and macroeconomic analysis confirm the current outlook for stabilizing inflation and somewhat subdued growth, the appropriate response in June would be to continue monetary easing and lower interest rates.”