ECB, Lane: ready to cut rates as early as next week. Villeroy: another cut in July not excluded

The ECB is ready to start cutting interest rates from next week. The announcement was made by ECB Executive Board member Philip Lane, speaking to the Financial Times. 'Barring any major surprises, at this moment what we see is sufficient to remove the maximum level of tightening,' Lane said in an interview with the British financial newspaper. Furthermore, Lane claimed the ECB's success in being able to bring down theinflation in a timely manner. That said, he added, 'monetary policy must remain in restrictive territory.

"At our June meeting, should our updated estimates of the inflation outlook, core inflation dynamics and the strength of the monetary policy transmission further increase our confidence that inflation is converging to our target in a sustained manner, it would be appropriate to reduce the current level of monetary policy tightening," the chief economist of the speaking at the Institute of International and European Affairs in Dublin reiterated. "The subsequent pace of rate cuts," Lane added, "will be slower if there are upward surprises on core inflation and the level of demand and will be faster if there are downward surprises on core inflation and the level of demand.

"In deciding on the appropriate path of monetary policy rates," Lane pointed out, "we will continue to follow a data-driven approach and address meeting-by-meeting the determination of the appropriate level and duration of tightening, and we do not commit ourselves in advance to a particular rate path. This approach has served us well in the tightening cycle and many of the same considerations will apply during the easing phase."

For Bank of France Governor Francois Villeroy, the European Central Bank should not rule out cutting rates in both June and July, he told the Boersen-Zeitung. Villeroy said he preferred 'maximum optionality' after the now certain cut next month, which could only be postponed due to a shock.