ECB rate cut bets premature, markets have eased too much – Slovenia’s Governor

The European Central Bank will need at least until spring before it can reassess its policy outlook and market expectations for an interest rate cut in March or April are premature, ECB policymaker Bostjan Vasle said on Monday.

The ECB left interest rates unchanged last week and guided for steady policy in coming months, even as investors piled pressure on the bank to follow the U.S. Federal Reserve in signalling rate cuts given an a string of unexpectedly benign inflation data.But Vasle, Slovenia’s central bank governor, pushed back on market bets and even argued that financing conditions may no longer be restrictive enough, given tumbling bond yields and expectations for 150 basis points of rate cuts in 2024.”Market expectations for interest rates cuts are premature in my view, both with regard to the start of cuts and the totality of moves,” Vasle told Reuters.”The market pricing has lowered the level of restriction and this recent accommodation priced into interest rates is inconsistent with the stance appropriate to return inflation to target,” said Vasle, who is considered among the more conservative members of the ECB’s rate-setting Governing Council.