ECB strengthens case for further rate cuts

Piero Cipollone, a member of the European Central Bank's (ECB) Executive Board, said that the case for lowering interest rates has become stronger since the bank's last meeting. He shared his views in an interview with Spanish newspaper Expansion. Cipollone mentioned several reasons for this shift, including falling energy prices and the strengthening euro. He also noted that higher real interest rates and possible trade tensions with the United States are important factors. During the ECB's last meeting in March, the bank cut interest rates by a quarter point and did not give a clear direction for future decisions. Markets are currently speculating about further rate reductions, potentially bringing them below 2%. Cipollone believes that new data could show the ECB reaching its inflation goals sooner than expected. He indicated that if the trends continue, there may be room for further rate cuts in the coming meetings, which include one scheduled for April 17. He also addressed the impact of the ECB's balance sheet reduction on lending. The bank estimates that a planned decrease of €500 billion in its debt portfolio in 2025 could reduce credit supply by €75 billion. Cipollone emphasized the need to monitor this effect as it could influence future monetary policy decisions.