ECB officials are increasingly considering the possibility of rate cuts, as revealed in the minutes of the latest ECB meeting. While awaiting further data, they noted a strengthening argument for such action, particularly as inflation is projected to continue its downward trajectory. The updated staff projections, indicating a swifter return of inflation to the 2% target, were welcomed, largely driven by falling energy prices. Yet, officials remained cautious, highlighting concerns about persistent domestic price pressures, including robust wage growth and sluggish labor productivity. They emphasized the fragility of the disinflationary process, contingent upon favorable developments in wages, profits, and productivity, underscoring the need for more comprehensive insights by the June meeting.
