Here’s what 12 European Central Bank members said about interest rates this week


A sculpture of the Euro currency stands in the city centre of Frankfurt am Main, western Germany, on January 25, 2024.

Kirill Kudryavtsev | Afp | Getty Images

A host of economists and monetary policymakers gathered in New York this week for the International Monetary Fund’s Spring Meetings — including numerous decision-makers from the European Central Bank.

CNBC spoke to 12 members of the ECB’s Governing Council at the event to unpack their latest views on the interest rate outlook and inflationary pressures, after euro zone price rises cooled to 2.4% in March.

The ECB opted to hold rates steady in April and next meets to vote on monetary policy on June 6.

Christine Lagarde, president of the ECB

The ECB’s figurehead delivered a firm message that reflected her statements in recent press conferences: markets should expect an interest rate cut soon, barring major surprises.

“We just need to build a bit more confidence in this disinflationary process, but if it moves according to our expectations, if we don’t have a major shock in development, we are heading towards a moment where we have to moderate the restrictive monetary policy,” Lagarde told CNBC’s Sara Eisen.

François Villeroy de Galhau, governor of the Bank of France

According to Villeroy, the ECB should cut in June so that higher rates do not cause too much damage to the euro area economy, which last year narrowly avoided a recession but fell into stagnation.

Barring a major surprise before the next Governing Council in early June, “we should cut rates because we are now confident enough and increasingly confident about the disinflationary path in the euro area,” Villeroy told CNBC’s Karen Tso.

“There is now a very large consensus that it is time to take this insurance more or less against what I would call the second risk. The first risk is to act too early and to let inflation go upwards again and this would be a danger,” he said. “But the second risk would be to be behind the curve and to pay a too high cost in terms of economic activity and employment.”

Watch CNBC's full interview with Bank of France Governor François Villeroy de Galhau

Joachim Nagel, president of Germany’s Bundesbank

The “probability is increasing” of a June cut, said Nagel. He added that there were caveats, including the risk of higher oil prices.

Core inflation is still high, service inflation is high. For the June meeting we will get our projections, so we will get our new forecasts and if there is a confirmation that inflation is really going down, and we will achieve our target in 2025, as I said, the probability is becoming higher that this rate cut is here for the June meeting,” Nagel explained.

Watch CNBC's full interview with German central bank chief Joachim Nagel

Robert Holzmann, governor of the Austrian Central Bank

One of the Governing Council’s most hawkish members, Holzmann flagged geopolitical tensions as the biggest threat to interest rate cuts this year.

“We have seen what’s happened in the Middle East … we may have a different oil price, and this of course may require us to rethink our strategy,” he said. 

ECB’s Holzmann says biggest threat to strategy is the geopolitical situation in the Middle East

Mario Centeno, governor of the Bank of Portugal

For Centeno, a more dovish member, it is “about time to change this monetary policy cycle” given the recent slowdown in inflation.

“I’m sure that we will deliver the response that is consistent with the recovery of the euro area economy that we have in our forecast,” Centeno said, adding that market expectations for June were “very clear.”

Watch CNBC's full interview with ECB policymaker Mario Centeno

Gabriel Makhlouf, governor of the Central Bank of Ireland

Makhlouf said the most recent data sets had shifted his view on rates. Before Christmas he was not even ready to rule out further hikes.

The ECB concluded its run of 10 consecutive rate hikes in September, when it brought its key rate to a record 4%.

“I think we’ve now over the last few weeks seen enough data to say that we’ve reached the top of the ladder, and at our last meeting, from my perspective, we’ve got greater confidence that we can start to reduce the tightening in our monetary policy stance,” Makhlouf said.

ECB's Makhlouf: Expect a change in rates in June in the absence of shocks

Pierre Wunsch, governor of the National Bank of Belgium

“We would really need bad news for not cutting in June,” Wunsch told CNBC, referring to two surprisingly negative inflation prints or oil prices spiking. ECB staff projections, wage data and the rate of services inflation will also be crucial, he said.

Regarding a potential follow-up cut in July, Wunsch said he would be “on the cautious side.”

Watch CNBC's full interview with the Belgium central bank governor

Boris Vujčić, governor of the Croatian National Bank

Addressing whether the ECB would be influenced by recent events in the U.S., where stickier-than-expected inflation and comments by Federal Reserve Chair Jerome Powell have caused markets to push back their expectations for rate cuts, Vujčić stressed the central bank’s independence.

“We will run our policy independently from the Fed. We will look at our set of data, and there are obvious divergences between the U.S. and Europe since the start of the inflation cycle, not only now. So whatever the Fed chooses will not determine what our choice is,” Vujčić said.

ECB's Boris Vujčić: We will 'run our policy independently of the Fed'

Gediminas Šimkus, governor of the Bank of Lithuania

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