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It’s time for the ECB to diverge from the Fed, Stournaras says

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'Now it’s time to diverge,' Stournaras told Bloomberg. 'The situations in the euro area and the US are completely different.'

The European Central Bank shouldn’t be afraid to shift its “overly prudent” stance on interest rates away from that of the Federal Reserve, according to Governing Council member Yannis Stournaras.

The remarks come on the heels of a US inflation release that overshot expectations and triggered a rapid repricing of bets on monetary easing. Markets now reckon the euro zone, where the most recent consumer-price data fell short of estimates, will see three rate cuts in 2024, compared with fewer than two for the Fed.

“We are not Fed-dependent,” Lagarde told reporters. “The United States is a very large market a very sizable economy a major financial center as well so all that finds its way into our projection.” “We see the first seeds of a recovery in Europe — also in Germany,” Stournaras said. “We don’t want to kill these first seeds of recovery.” ADVERTISEMENT CONTINUE READING BELOW He’s pushing for back-to-back rate reductions in June and July, followed by another two by year-end — a view that’s not shared by all 26 members of the Governing Council.

 

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