Link Securities| In an interview for the US portal CNBC, ECB President Lagarde said yesterday that the central bank is still on track to cut interest rates in the short term, subject to any major shocks. She said they are observing a disinflationary process that is proceeding in line with their expectations.
He added that they just need to build a little more confidence in this disinflationary process, but if it proceeds according to their expectations, if they do not have a major shock in the development, they are heading towards a time when they will have to moderate monetary policy tightening in a reasonably short period of time.
Assessment: Lagarde yesterday again left the door open to a first rate cut at the ECB Governing Council meeting in June. This will require that the situation in the Middle East does not worsen and that this does not lead to further rises in oil prices, a variable that could derail the disinflationary process underway.
