European Central Bank Governor Wenshi is dovish: may have to lower interest rates below 2%.

Jin10 data on May 18, reported that European Central Bank committee member Visser stated that due to the potential for the global trade war to lower consumer prices, the European Central Bank must be ready to reduce interest rates to “slightly below” 2%. He said: “If I look at the economy - the shocks we face and the uncertainty of growth - there may be reason to provide moderate support.” He indicated that this could mean lowering the central bank’s key deposit arrangement interest rate to “slightly below 2%”. Since June of last year, the European Central Bank has cut interest rates seven times, lowering the benchmark interest rate from 4% to 2.25%. The market currently expects the European Central Bank to cut rates by 25 basis points in June and again by 25 basis points in the second half of this year, bringing the deposit arrangement rate down to 1.75%. Visser stated that he “was not surprised” when he saw market forecasts. Visser’s comments supporting further rate cuts are in stark contrast to his relatively hawkish stance in the past. In February of this year, he stated that the European Central Bank should not “thoughtlessly and sleepwalkingly lower interest rates to 2%”.