Cipollone: ECB’s stance on rate cuts has strengthened

According to Piero Cipollone, a member of the Executive Board of the European Central Bank (ECB), arguments in favor of additional interest rate cuts have grown stronger. He cited the decline in energy prices and the strengthening of the euro as key factors that could allow the regulator to pursue further monetary easing.

Given the rise in real interest rates and the possibility of increased trade tensions with the United States, Cipollone sees justification for a more accommodative monetary policy. Assessing the inflation outlook, he highlighted the likelihood of hitting the ECB’s targets sooner than previously expected. These data points, he noted, also open the door to renewed discussion of additional rate cuts.

Cipollone additionally drew attention to the potential risks to bank lending arising from the ECB’s balance sheet reduction. The planned cut of the asset portfolio by 500 billion euros ($540 billion) could, according to the official, result in a 75 billion euros (over $81 billion) contraction in lending.

Looking ahead, he said the ECB will make a balanced decision on its next steps, taking into account the latest data, at the upcoming meeting on April 17.