By Ed Frankl
European Central Bank policymakers should have greater confidence that inflation is heading toward its 2% target after the most recent economic data, pushing up rate-cut hopes at the next meeting in June, its chief economist said Monday.
"Both the April flash estimate for euro area inflation and the first-quarter GDP number that came out improve my confidence that inflation should return to target in a timely manner," Philip R. Lane told Spanish publication El Confidencial.
Eurozone inflation fell to 2.7% in April from 2.9% in March, with the bloc's gross domestic product growing 0.3%, a little above expectations, in the first three months of the year.
A cut at the ECB's meeting in June would therefore be no surprise, he said.
"But we will have another month of inflation data when we meet in June. And we will also have more information on wage dynamics. It's not necessary to make excessively certain statements," he added.
Money markets continue to expect the ECB to cut interest rates for the first time in June. However, Lane said the bank's governing council would be data dependent in its future decisions, and stressed that policymakers shouldn't exaggerate the influence of the U.S. Federal Reserve, which looks likely to hold rates higher for longer, when considering the ECB's next steps.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
05-06-24 0603ET
