BoG gov Stournaras: ECB likely to cut interest rates again in April

In an interview with Econostream, he stated, “If the meeting were held today, I would be more confident that we would decide on a rate cut because February inflation was at 2.3%, in line with our projected trajectory. Whether our forecast materializes depends on further interest rate reductions. Additionally, Q4 2024 data shows a slowdown in wage growth. Service-sector inflation is easing, and core inflation has also declined. Everything points toward a rate cut in April. However, we are still in March, with a month ahead, so I cannot definitively say we will decide on a cut. The level of uncertainty is so high that it is impossible to predict what might happen to alter our decision.”

Stournaras reiterated his prediction that two more rate cuts are expected this year, with 2% being the final level. However, he clarified that he cannot specify the exact timing of these cuts, as high uncertainty makes precise forecasting unwise.

He also dismissed the possibility of the ECB’s key interest rate dropping to 2%, stating, “Before the European Commission’s decision and Germany’s debt brake ruling, and with a tariff war looming across the Atlantic, there may have been enough signs of slowing growth for the rate to reach not 1.5% but perhaps 1.75%.”