Anna 
In a statement on Monday, European Central Bank (ECB) policymaker Mario Centeno emphasized the need for the central bank to “start cutting rates sooner rather than later” while urging caution to avoid abrupt moves. Centeno’s remarks came in response to the current economic landscape and declining inflation, calling for a measured approach to monetary policy adjustments.
Centeno highlighted that inflation is decreasing in a sustained manner, noting that almost all factors that previously drove prices up have dissipated. He suggested that waiting for wages data in May should not be a prerequisite for making rate decisions. Additionally, Centeno expressed the view that there are no visible second-round effects of wage hikes, emphasizing the need for a proactive stance in managing monetary policy.
Market Reaction:
The market response to Centeno’s comments has been notable, with the EUR/USD currency pair heading lower toward 1.0800. This represents a 0.26% decline on the day, reflecting the impact of the policymaker’s stance on potential rate cuts and the market’s perception of the economic outlook.
Centeno’s emphasis on a gradual approach to rate cuts, despite acknowledging the decrease in inflation, indicates a delicate balancing act for the ECB. Traders and investors are adjusting their positions in response to the evolving economic narrative and the potential implications for currency dynamics in the Eurozone.
As monetary policy discussions unfold, market participants will keenly monitor central bank decisions and policymakers’ statements for insights into the trajectory of interest rates and their impact on currency markets.
