On the latest available information, the European Central Bank “can’t rule out (rate) cuts”, governor of the Bank of Spain, Pablo Hernandez de Cos, said in an interview with Borse Zeitung published Friday, albeit stressing that it is too early to talk about interest rate cuts.
“It depends on whether or not inflation and growth develop in line with their projected paths,” he said, when asked how long rates should be kept at current levels.
“As inflation falls, it is realistic to expect the policy rates to be eased back to neutral”, he said, adding that pricing also reflects that markets believe the ECB projections. Asked about if rates have reached its peak, de Cos said that the ECB would respond to additional inflation or growth shocks.