April 25, 2024

Euro-Zone Economy: ECB Should Put Rate Cuts on Its April Agenda

Inflation in the euro zone may not be decelerating as rapidly as it did last year, but that shouldn’t deter the European Central Bank from following the Swiss National Bank’s lead in cutting rates. With Tuesday’s numbers showing German consumer prices increased by just 2.3% last month and Wednesday’s figures for the bloc showing a bigger-than-expected slowdown to 2.4% from February’s 2.6% pace, the evidence is compelling that inflation is beaten; unfortunately, so is the economy.

That’s why policymakers who’ve made it plain they’re minded to cut borrowing costs in June should be emboldened to strike earlier, by introducing their first 25 basis-point reduction in official interest rates at next week’s Thursday meeting. There’s a particularly long gap of 39 business days between April 11 and the June 6 meeting; staying on hold next week could mean an agonizing wait as worsening economic data keep trundling in.

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