Bank of Greece governor backs ECB's cautious approach to further rate cuts

Yannis Stournaras, a member of the European Central Bank's (ECB) Governing Council, said the monetary authority should be cautious about additional cuts in borrowing costs due to global uncertainty.

Stournaras, who also serves as governor of the Bank of Greece, expects the ECB's deposit rate to be cut from the current 2.25% to 2%. Thus, the regulator is forecasting only one quarter-point reduction in the rate. Meanwhile, investors anticipate two or three more cuts before the end of the year.

Citing market expectations, Reuters reports that the first reduction is likely to occur at the next ECB meeting in June. Monetary policy easing is becoming increasingly necessary against the backdrop of US President Donald Trump's trade policy. Its effects could undermine economies worldwide and slow inflation in Europe.

According to Stournaras, the varying prospects for price and GDP growth among the bloc's member states increase uncertainty and complicate ECB's monetary policymaking.