© Reuters. A view of the European Central Bank (ECB) headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker/File Photo
FRANKFURT (Reuters) – European Central Bank policymakers are open to a change in their rhetoric at their next meeting, paving the way for an interest rate cut possibly in June, if upcoming data confirms inflation has been vanquished, four sources told Reuters.
The ECB kept interest rates unchanged at a record-high 4% on Thursday and gave no hint that it is even contemplating a start to easing.
But policymakers know that the time to start discussing a first rate cut is approaching, provided that inflation and wage data confirm that price growth is already heading to the ECB’s 2% goal this year, the sources close to the matter said.
That scenario would set the scene for a change in tone at the ECB’s March 7 meeting, when the central bank is also set to issue new economic projections, the sources said.
That in turn could clear the way for a rate cut most likely in June, when official wage data will have been published, the sources added.
Policymakers recognised inflation had fallen faster than the ECB had expected – and perhaps than its December forecasts implied – last autumn but they also cautioned that incoming data needed to cement that improvement, the sources said.
An ECB spokesperson declined to comment on the sources’ statements.