• I see scope for an interest rate reduction in June.
  • Balance of risks for inflation is to the downside due to trade friction with the US and stronger euro.
  • Borrowing costs are currently at the upper end of the neutral range.
  • The risks that inflation will be below the goal in the future have increased.

Today, the French inflation data missed expectations by a big margin which weighed on the euro. We might see the divergence between the Fed and the ECB getting stronger in the next months.

ECB's Simkus
ECB's Simkus
Source: Forex Live