AMSTERDAM (Reuters) -ECB policymakers will need to get a clearer picture of the effects of U.S. and EU trade policies on inflation before they can decide whether interest rates need to be cut in June, ECB governing council member Klaas Knot said.
“I can’t exclude we will decide to have another rate cut in June, but I also can’t confirm it,” Knot told reporters at the Dutch central bank.
“Ultimately we have to focus on the medium to long term, where the impact (from trade policies) on inflation is a lot more uncertain than in the short term.”
Knot said new inflation projections at the June policy meeting would take into account various scenarios for inflation in the euro zone, in light of trade tariffs announced and later suspended by the U.S. administration and possible retaliation from the EU.
“I expect our projections to show lower inflation this year and next, but it is more interesting to see what happens after that period”, Knot said.
(Reporting by Bart Meijer; Editing by Conor Humphries)
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