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ECB's Wunsch assumes regulator may cut rates below 2% level
Pierre Wunsch, the head of the central bank of Belgium, suggests that the European regulator will probably have to cut interest rates to just under 2%, citing global trade tensions that create risks of rising inflation and a slowing economy.
Known previously for his hawkish stance, Wunsch said that recent turmoil and uncertainty could justify a soft, supportive monetary policy. He does not rule out cutting the deposit rate below the current level of 2.25%. At the same time, policymaker sees no reason to reduce borrowing costs by half a point in the foreseeable future, calling for caution in easing.
According to Reuters, markets estimate a 90% probability of an ECB rate cut on June 5 with one more additional move before the end of the year. Thus, the central bank's deposit rate could reach 1.75% by the end of December.
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