The Governing Council of the European Central Bank (ECB) maintains the position that at its next meeting in early June it may be appropriate to cut interest rates, which would mark the first drop since 2015, although the German representative on the board of The institution, Isabel Schnabel, warns that a second adjustment at the July meeting “does not seem justified.”

“Depending on the available data and the new projections of the Eurosystem experts, a rate cut in June may be appropriate,” acknowledges Schnabel in an interview with the Japanese newspaper ‘Nikkei’, where he warns, however, that, “Based on current data, a rate cut in July does not appear justified.”

In this sense, the German company considers that the path beyond June “is much more uncertain” and the most recent data confirm that the last stretch of the disinflation process “is the most difficult” once most of the supply-side shocks that affected prices.

Indeed, while in the euro area some of this is due to base effects and the reversal of fiscal measures, Schnabel warns that the part of inflation that has taken hold through second-round effects is becoming more persistent.

“Given the great uncertainty about the inflation outlook, we should give ourselves enough time to evaluate how the recovery is progressing and how monetary policy affects economic growth and inflation,” he defended.

Thus, after so many years of very high inflation and with inflation risks still tilted upwards, for the German, an anticipation of rate cuts would entail the risk of premature flexibility.

“Further progress is needed in inflation and especially in domestic inflation, which is proving more difficult, to foster our confidence that inflation will sustainably return to our 2% target no later than 2025,” he added.