ECB’s Wunsch: Successive rate cuts in Jun and Jul could trigger excessive repricing

ECB Governing Council member Pierre Wunsch expressed today that he is “very comfortable” with rate cut in June. He also anticipates that at least two rates cuts this year, “barring any bad news”.

However, Wunsch was careful to temper expectations regarding the pace of future rate cuts, particularly stressing that a reduction in rates in July, following a potential June cut, is “not a done deal”.

He highlighted the importance of “managing expectations,” noting that too rapid a sequence of rate reductions could lead the markets to anticipate cuts at every ECB meeting. Such a perception could trigger an excessive repricing in the markets, which Wunsch views as problematic.