Three ECB Cuts Now More Likely in 2024, Stournaras Tells Liberal

Sotiris Nikas, Bloomberg News

, Eurostat

(Bloomberg) -- The European Central Bank will probably lower borrowing costs three times this year instead of four, according to Governing Council member Yannis Stournaras.

The Bank of Greece reviewed Eurostat’s recent inflation and growth data and “we now consider three rate cuts in 2024 as the more likely scenario,” Stournaras said in an interview with Liberal.

Inflation numbers are consistent with ECB’s most recent projections, but first-quarter output figures were a positive surprise, Greece’s central bank chief said.

“If this pace of economic growth continues, then consumer-price growth is likely to be marginally higher than our March forecast, but without jeopardizing the 2% target in mid-2025,” Stournaras said.

Data earlier this week revealed that the slowdown in euro-area inflation stalled at 2.4% in April, even as gains in services prices eased. At the same time, gross domestic product in the January to March period rose by 0.3% — the strongest in 1 1/2 years.

The ECB appears ready to cut rates when policymakers meet in early June, but it remains unclear what their subsequent moves will be. Some dovish Governing Council members are pushing for back-to-back steps, while hawkish officials have been more cautious.

Stournaras is mostly worried by the geopolitical developments around the world and the US’s fiscal situation.

If the US’s debt sustainability is disrupted, “then we will see financial stability problems all over the planet,” Stournaras said.