- Quite likely keeping 2% inflation will require some further cuts for fine tuning.
- Market pricing of one more cut or so not out of the realm of the baseline.
- Fine-tuning cuts will very much depend on how the economy develops.
- May at some point, not yet by any means, go into accommodative territory.
- Must be cautious about potential persistence of undershooting.
- We need to take care of those risks of a too persistent or large deviation from target.
- So far, seems deflationary effect of trade tensions could dominate, but final outcome open.
- June cut to ensure that inflation in 2026 eventually turns the corner and starts returning towards 2%.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
