The ECB kept rates unchanged at a record high last Thursday but sounded confident that inflation was coming under control, fuelling already widespread bets in the market that policy easing could start in early spring.
“The next move will be a cut, and it is within our reach,” Kazimir said in a blog post. “I am confident that the exact timing, whether in April or June, is secondary to the decision’s impact.
“The latter seems more probable, but I will not jump to premature conclusions about the timing,” he said.
Kazimir, an outspoken conservative on the 26-person Governing Council, said that patience was essential before the ECB made pivotal decisions and incoming inflation figures along with the ECB’s March projections will be crucial.
Investors now see 140 basis points worth of interest rate cuts this year and see a close to 100% chance of the first move coming in April.
“The risks of a premature cut, in my view, are much greater than those of acting a bit later,” Kazimir said. “We are not behind the curve; it’s more the case that the market has gotten ahead of events since December.”
He warned that moving too quickly could derail disinflation and the ECB also needed to see data from collective bargaining deals in the first quarter.
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