ECB’s Knot does not exclude additional interest rate cut in June

According to Klaas Knot, member of the Governing Council of the European Central Bank (ECB), an additional reduction in borrowing costs is possible as early as next month. However, he noted that it is still “too early” to make decisions without fresh quarterly forecasts.

At the moment, money markets are expecting the eighth ECB deposit rate cut in the current cycle on June 5, Bloomberg says. Behind such expectations are eurozone inflation approaching 2% and obstacles to the bloc's economic expansion. The latter are largely related to President Donald Trump's tariffs, which undermine household confidence and force companies to postpone investments.

According to the agency, the ECB’s updated forecast will reflect the current impact of US trade policy alongside slowing economic growth and inflation in the eurozone.

The ECB meeting next month will be Knot’s last as a Governing Council member, as he is set to resign at the end of June.