ECB Member Hints at Two More Rate Cuts This Year Amid Economic Uncertainties

A member of the European Central Bank's Governing Council has indicated that the possibility of two more interest rate cuts this year cannot be ruled out. This statement comes amidst growing economic uncertainties and the need for the ECB to remain agile in its monetary policy decisions. The council member emphasized that while the current economic outlook is stable, the ECB must be prepared to adjust its policies in response to any emerging risks or changes in the economic landscape.

The council member's remarks highlight the ECB's commitment to maintaining economic stability and supporting growth. By keeping the door open for further rate cuts, the ECB aims to ensure that it has the flexibility to respond to any potential downturns or unexpected developments. This approach is in line with the ECB's mandate to promote price stability and support the overall economic health of the eurozone.

The possibility of additional rate cuts was also discussed by other members of the Governing Council. Austrian central bank chief Robert Holzmann suggested that interest rates should be held steady until there is more clarity on the path of U.S. tariffs and their potential impact on the eurozone economy. This cautious approach reflects the uncertainty surrounding global trade policies and their potential effects on inflation and growth.

Another council member, Olli Rehn, noted that the decision to implement a larger-than-normal 50-basis point rate cut would depend on the medium-term inflation outlook and the growth prospects of the eurozone. Rehn's comments underscore the importance of monitoring economic indicators and adjusting monetary policy accordingly to ensure that inflation remains within the ECB's target range.

The ECB's Governing Council member also suggested that the central bank should consider lowering interest rates at its next meeting in June if forecasts indicate that eurozone inflation is likely to fall below the bank's 2% target. This proactive stance aims to preempt any potential slowdown in economic activity and maintain stable price levels.

The council member's remarks come as markets are currently pricing in two more quarter-point reductions before the end of 2025, as well as a 60% chance of a third cut. This market sentiment reflects the growing expectation of further monetary easing by the ECB in response to economic uncertainties and the need to support growth.